Fool’s School

Retirement Blunders To Avoid

If you want your retirement to be as comfy and secure as possible, avoid these mistakes:

≤ Assuming Social Security will be enough: The average monthly retirement benefit was recently $1,523. That’s a little more than $18,000 per year, and many people will receive much less than that. To learn how much you can expect from Social Security based on your earnings so far, visit SSA.gov and set up a “my Social Security” account. Then develop a plan to build any additional income you’ll need through saving and investing.

≤ Not signing up for Medicare on time: If you’re late enrolling in Medicare, you can be slapped with a hefty penalty fee. You’re eligible for Medicare at age 65, and you can sign up anytime within the three months leading up to your 65th birthday, during the month of your birthday or within the three months that follow. Visit Medicare.gov for more info.

≤ Failing to take required minimum distributions (RMDs) on time: Owners of traditional IRAs and 401(k)s (though not Roth IRAs) are required to withdraw a minimum amount each year — for new retirees, beginning the year you turn 72 — and missing the deadline can be extremely costly. (RMDs were waived for 2020 due to the pandemic.) For more on RMD rules, visit AARP.com and type “RMD” into the search box there.

≤ Not considering fixed annuities: Variable or indexed annuities can be problematic, with steep fees and restrictive terms, but fixed annuities (immediate or deferred ones) are more straightforward. They offer dependable income for a set period — which can be the rest of your life.

≤ Underestimating the cost of health care: It’s been estimated that married retirees will spend hundreds of thousands of dollars out of pocket on health care during their retirement. Aim to keep your costs down by staying healthy and being smart about Medicare, choosing the plan that will serve you best and making the most of all it offers, such as free cancer screenings.

The Motley Fool Take

Pharma Perks — and More

AbbVie (NYSE: ABBV) is one of the least expensive big pharmaceutical stocks on the market, with promising growth prospects.

It has grown rapidly in recent years thanks largely to Humira, its key immunosuppressive drug — which is facing the expiration of its patent protection beginning in 2023. Not surprisingly, emerging competition from biosimilar products has made investors jittery, but AbbVie is prepping for a life beyond Humira. To start, its Rinvoq and Skyrizi drugs are in late-stage regulatory review and on track for faster launches than previously planned. AbbVie projects the two drugs could bring in revenue of more than $15 billion by 2025. The company has several other growth drivers as well, including blood cancer drugs Imbruvica and Venclexta, plus antipsychotic drug Vraylar.

AbbVie’s recent acquisition of Allergan, which added Botox and neurological drugs to its portfolio, should also drive growth. Allergan generated $16.1 billion in revenue in 2019. For the full year 2020, AbbVie projects Allergan to add 12% to its adjusted earnings per share.

Meanwhile, management is targeting a reduction in debt of between $15 billion and $18 billion by the end of 2021. That should help AbbVie keep increasing dividends, which recently yielded 4.7%.

With improving growth prospects, a fat dividend and a bargain valuation, AbbVie deserves consideration.