Do you have a financial plan for the future? |

Do you have a financial plan for the future?

Jeffrey Apps and Tracy Tutag

As we approach the end of the year, some find that they often spend more time planning recreational activities or the carpool schedule than planning for the financial future. The term “future” can lead us to believe that we have plenty of time to plan, but the future can be short or long term. Let’s look at two couples in retirement.The first couple worked throughout their entire adult lives. But once they retired, they had to sell their house and move into a rather cramped but more affordable condo in a nearby retirement village. Even combining the proceeds from the house sale with their Social Security and pension benefits, this couple finds their monthly budget a tight fit. The second couple also retired after working for many years. However, this couple made the decision to retire when the husband reached age 62 and took the first year of their retirement to travel, visiting their children. They still live in their same house.The difference in standard of living between these two couples? Careful planning by the second couple over many years versus an unfortunate belief by first couple that their pensions and Social Security would take care of retirement. Retirement in the future will be a greater challenge than ever before. There are many reasons, including:– More income is required for retirement years as people are retiring earlier and living longer;– Health care costs, especially for the elderly, continue to rise faster than the cost of living;– Inflation erodes the purchasing power of retirees;– High personal income taxes reduce individual savingsWhile it’s hard to find time to look to the future, the good news is that with careful planning a financially secure retirement is possible, especially if you are ten or more years away from retirement. Social Security provides a financial foundation for nearly everyone’s retirement. Early in your retirement planning you should obtain a copy of your “Personal Earnings and Benefit Statement,” Form SSA 7004, from your local Social Security office or the Social Security Administration (1-800-772-1213). Complete and mail in this form in order to review the history of your benefits. While Social Security should be viewed as a building block in your retirement plan, you must remember that the higher your pre-retirement income, the smaller the amount of income it replaces.If there is a shortfall in your retirement income, where will the missing income be found? Personal savings is the other element in successful retirement planning. Without additional income from your assets, you may eventually have to sell off nonincome producing assets or become financially dependent on your children or others. Personal savings, accumulated through a savings program begun early in your working career, perhaps nurtured by tax-advantaged strategies until your chosen retirement age, can be the key to an independent and financially secure retirement. Jeffrey Apps and Tracy Tutag offer securities and investment advisory services through AXA Advisors, LLC. They can be reached locally at 926-0601 or tracy.tutag@axa-advisors.comVail Colorado

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