Financial Focus: Consider multiple factors when creating retirement plans (column)
When you create your financial and investment strategies for retirement, what will you need to know? In other words, what factors should you consider, and how will these factors affect your investment-related decisions, before and during your retirement?
Consider the following:
• Age at retirement: Your retirement date likely will be heavily influenced by your financial situation, so if you have to keep working, that’s what you’ll do. But if you have a choice in the matter, your decision could have a big impact on your investment strategy. If you want to retire early, you may need to save and invest more aggressively than you would if you plan to work past typical retirement age.
Also, your retirement date may affect when you start accepting Social Security payments; if you retire early, you might have to start taking your benefits at age 62, even though your monthly checks will be considerably smaller than if you waited until your “full” retirement age, which is likely to be 66 or 67.
• Retirement lifestyle: Some people want to spend their retirement years traveling, while others want to stay close to home and family, pursuing inexpensive hobbies. The lifestyle you choose will affect how much you need to accumulate before you retire and how much you will need to withdraw from your investment accounts once you do.
• Second career: Some people retire from one career only to begin another. If you add a new source of earned income, you might be able to withdraw less from your retirement accounts each year, but if you keep earning income, you can continue putting money into a traditional IRA until you’re 70 ½ or a Roth IRA indefinitely and possibly contribute to a retirement plan for the self-employed.
• Philanthropy: During your working years, you may have consistently donated money to charitable organizations. And once you retire, you may want to do even more. You can volunteer more of your time, but you also might want to set up a more permanent method of financial support. Consequently, you might want to work with your legal advisor and financial professional to incorporate elements of your investment portfolio into your estate plans to provide more support for charitable groups.
Retirement goals can affect your investment strategy and vice versa. Think carefully about what you want to accomplish, plan ahead and get the help you need.
This article was written for use by local Edward Jones financial advisors. Edward Jones and its associates and financial advisors do not provide tax or legal advice. Chuck Smallwood, Kevin Brubeck, Tina DeWitt, Charlie Wick and Bret Hooper are financial advisors with Edward Jones Investments and can be reached in Edwards at 970-926-1728, in Eagle at 970-328-4959 or in Avon at 970-688-5420.
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