Welcome to my video presentation for Wednesday, September 11. The article below is a condensed transcript. For greater details and charts, watch my video.

The U.S. Bureau of Labor Statistics reported Wednesday that the consumer price index (CPI) climbed 2.5% in August from a year earlier, a substantially cooler pace of inflation than July’s 2.9% and down sharply from a peak of 9.1% in 2022.

That’s great news. Falling inflation enhances the odds that the Federal Reserve will announce an interest rate cut at its meeting on September 18.

However, I want to take a break today from government economic data, election politics, and predictions about the Fed’s next move. What matters most to you: the ephemeral news cycle or your long-term retirement security? The latter, of course.

Let’s step back from the daily gyrations of the markets, to examine timeless investing principles. If you’re worried that you won’t have enough money set aside to retire comfortably, you’re not alone. Surveys show that millions of Americans are terrified of outliving their savings.

A recent GOBankingRates survey of more than 1,000 adults found that as many as 28% of Americans have nothing saved for their retirement, 39% aren’t contributing to a retirement fund and another 30% don’t think they’ll ever be able to retire. Our country faces a worsening retirement crisis.

Below is a four-point checklist of steps to expand your portfolio for a more secure financial future. Don’t just survive in retirement…make sure you also thrive.

1) Set a Retirement Date

It’s important to have a specific date in mind for when you plan to retire. This should be based on multiple factors.

If you enjoy your job, would you prefer to keep working (and saving) a little longer? It’s tough to get back into the working world once you’ve left it behind.

Are you slated to get a defined-benefit pension from your job? Are you fully vested? If so, you may not need to make significant changes in your investments.

Make an assessment of your future spending needs. Will you sell your home and move to a lower-cost area? What are the tax consequences of this? After you set a specific target, you can start formulating your strategy for getting there.

2) Reduce Your Social Security Expectations

Among the many political norms shattered these days is the notion that Social Security is untouchable. For those lacking a strong investment portfolio, it doesn’t bode well.

The non-partisan Congressional Budget Office (CBO) currently estimates that the federal budget deficit in fiscal year 2024 will total $1.9 trillion. The CBO projects that the deficit will reach $2.8 trillion by 2034.

Politicians are seizing on the data as an excuse to cut Social Security. The popular program is likely to survive, but probably in curtailed form.

Social Security outlays totaled more than $1.2 trillion in 2023 (estimated), for about 5% of U.S. gross domestic product (GDP). The CBO predicts an increase in Social Security outlays of up to $1.8 trillion in 2029, which would amount to roughly 6% of projected GDP.

When are you eligible for full Social Security benefits? This varies depending on when you were born. If it was in 1960 or later, you will have to wait until age 67. If you start to collect your benefits earlier, your monthly payments will always be lower than if you had waited.

3) Create a Withdrawal Plan

It’s usually best to let your wealth compound tax-free for as long as possible. The greater variety of accounts you have, the more opportunities to diversify your tax savings.

As a general rule, you should withdraw cash from taxable accounts first. Later on, focus on tax-deferred accounts such as traditional Individual Retirement Accounts (IRAs) and annuities.

Leave accounts with tax-free withdrawals for last. An example of such an account is the Roth IRA, which allows taxpayers, subject to certain income limits, to save for retirement while allowing the savings to grow tax-free.

Taxes are paid on contributions, but withdrawals, subject to certain rules, are not taxed at all.

Early in your retirement, converting currently taxable assets to spending money makes sense because little or no additional tax likely will be due.

First, take dividend income and any mutual-fund distributions in cash instead of reinvesting them. You pay tax on these payouts even if you reinvest them, so this step won’t cost you anything.

Next, sell investments with no cost basis or the highest basis and therefore no or low taxable gain.

Assets with no cost basis include money funds and bank CDs as well as Treasury bills and various types of bonds held to maturity. Bond funds likely carry a high basis compared with your sale price, and therefore low tax liability.

Ideally, you’ll be more passive in taking long-term gains and more active in “harvesting” your tax losses.

Continuing to hold profitable, long-term investments in a regular account is a form of tax deferral. If you sell losing investments, you offset your tax liability on any gains you’ve taken with other investments.

4) Shield Inheritance

If you don’t take measures ahead of time, Uncle Sam will take a huge bite out of your inheritance via the capital gains tax.

One of the few ways to sidestep the substantial capital gains tax is to make a gift of property to a charitable organization. When you do so, you may take a deduction based on the full fair market value of the property, rather than just its cost.

The tax savings will largely depend on the amount of appreciation. In turn, you can reap greater income by investing these tax savings.

The most popular types of charitable giving plans are the annuity trust, revocable trust, pooled income fund, gift annuity, and life estate agreement. Consult your tax accountant for details, to find the plan that’s precisely right for you. But do it now.

Editor’s Note: I’ve just discussed ways to manage your retirement money. But what about making the pie bigger? Consider the advice of my colleague Jim Pearce.

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John Persinos is the editorial director of Investing Daily.

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