Will your financial plan allow you to retire? | VailDaily.com
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Will your financial plan allow you to retire?

Jeffrey Apps and Tracy Tutag
Vail, CO, Colorado

Today’s retiree faces a different set of issues than retirees in the past.

Does anyone really “retire” anymore? When should you take Social Security benefits? Will Medicare pay for nursing home needs? Which accounts should you access first for income needs?

Many retirees are working full or part-time because they choose to or because they have to supplement their income. People are generally living longer and spending more years in retirement. In 1970, the average age at retirement was 65 and the average retirement lasted 13 years. In 2000, the average retiree was 62 and should live another 18 years.



Revisiting your plan

Traditionally, retirees moved most of their assets into investments that provided a fixed income, but today’s retirees may need to invest for growth as well as income to provide for their needs. Not only are people living longer in retirement, they are also healthier. For many, retirement is a time for travel and pursuing new interests, and these pursuits cost money. Many pre-retirement financial plans assumed that post-retirement expenses would be lower. If that’s not the case, the plans should be reviewed.



The complexity of retirement assets may have increased as well. In the past, a retired couple may have had one Social Security payment, one pension payment, and income from savings. Today, each spouse may have lump-sum assets, such as profit sharing, proceeds from the sale of a business or pension payout, as well as periodic distribution from retirement programs. All of these income-producing assets should be managed for both maximum effectiveness and minimal taxes.

Issues to consider

Post-retirement financial planning involves more than investment decisions. A comprehensive plan encompasses developing strategies to maintain purchasing power in the face of inflation, preparing for emergencies and major events in the future and determining the timing for withdrawing money from retirement plans. Some people need to plan on how best to use the proceeds from the sale of an asset, such as a home or business. In addition, there are issues concerning financial responsibilities in the event of disability or impairments, and the eventual distribution of assets to beneficiaries.



Your post-retirement financial plan should begin with the basics: net worth, income and expenses. Analyzing these three factors will help you determine how long your assets will last at various rates of investment return, inflation and spending.

Together, you and your financial professional can determine both your current income needs and the amount of growth you will need in your assets in order to meet anticipated future expenses. From there, you can devise a diversified investment plan that might include annuities, stocks, bonds, short-term instruments, real estate and other investment classes to help you meet your goals. Your plan should also address budgeting, taxes, insurance and your estate.

Planning is a continuous process. As your circumstances and the allocation of assets in your portfolio change, you will need to make adjustments. If you have an outdated financial plan, or if you have no plan in place, you may benefit from establishing a post-retirement financial plan and reviewing it regularly with a financial professional.

Jeffrey Apps and Tracy Tutag sell securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC) 1290 Avenue of the Americas, New York, N.Y. 212-314-4600 and offer annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached at 926-0601 or tracy.tutag@axa-advisors.com


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