Fifty years ago, the average American could expect to live only 68 years.1
Social Security provided the lion's share of retirement income, supplemented by fixed-payment pension plans. Many retirees lived with their families, and retirement communities were largely a thing of the future. So were IRAs, 401(k) plans
and HMOs.
But times have changed Americans are working longer and are much more likely to live independently, leading healthier, more active lives.
At the same time, retirees have less financial security. Social Security now provides only 20% of retiree income on average and the program itself faces future funding deficits. Fixed pensions are now on the decline and many companies no longer even offer them. Retirees must depend on income from savings plans and their personal investments — making effective money management during retirement a priority.
These steps can provide guidance on what you need to consider to successfully manage your assets during your semi — or full retirement. Please keep in mind that this information is for educational purposes only and not considered financial advice. You should meet with a financial adviser to discuss your retirement investment strategy in more detail.
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It's important to figure out how much retirement income you need. A typical guideline is to plan on spending 60% to 80% of the last year of your pre-retirement income during
each year of retirement. However, this percentage can vary, depending on your
personal circumstances and lifestyle choices. As the first step in determining your
needs, ask yourself the following questions. |
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Will you continue to work?
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Where will you live?
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How long will you spend in retirement?
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What will be your retirement lifestyle? |
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Health Care Considerations |
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Factoring in Inflation. |
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What will be your sources of retirement income? |
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Social Security: How Will It Benefit You? |
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Do you receive a pension from your employer? If so, what type do you have? Does your pension pay survivor benefits after your death? |
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What Personal Investments do you have to provide retirement income?: |
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Assets and earnings account for the largest percentage of most Americans' retirement income. |
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Which of the following assets can you count on for retirement income? |
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401(k), 403(b), 457 and other employer-sponsored plans: |
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You may have one or multiple employer-sponsored, tax-deferred plans. |
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IRAs; Traditional IRAs, and or Roth IRAs, |
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These might include mutual funds, stocks, bonds, money market accounts and other investments. |
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Do you have other Sources of Income such as cash value life insurance, Income from trusts or income-producing real estate? |
 
Just because you stop working doesn't mean that your investment portfolio should stop working for you. Remember, you may be living in retirement for a long time, so you need to invest for the future as well as for today.
As with pre-retirement investing, a crucial element in your retirement investment strategy is your asset allocation. Asset allocation is the process of dividing your money among different types of investments — stocks, bonds and cash — to pursue a specific investment goal in the most effective way possible.
See your financial adviser before making any decision as to your asset allocation.
Once you've determined an appropriate asset allocation, you'll need to
select specific investments for each asset class. A financial adviser can
help you choose the individual investments.
When selecting investments, keep in mind that it's a good idea to diversify
your holdings whenever possible to reduce your exposure to the risks of
concentrating your assets in a particular company, sector or investment
type. Mutual funds can help you moderate this risk by diversifying among
many different securities. They also carry the advantage of professional
management and can be matched to fit specific asset classes.
* An investment in a money market fund is not insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund.
** Income may be subject to the Federal alternative minimum tax. These funds may not be appropriate for IRAs, 401(k)s and other tax-advantaged retirement plans.
*** In addition to normal risks associated with equity investing, smaller companies typically exhibit higher volatility.
† Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
†† International investing involves special risks including currency risk, increased volatility of foreign securities, and differences in auditing and other financial standards.
Mutual funds are subject to risks and fluctuate in value.
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 A big issue facing many retirees is which assets to tap into
first. There's a good chance that you've accumulated a variety
of retirement investments — 401(k) plan assets, Traditional
IRAs, Roth IRAs, annuities and numerous other personal
investments. While some of these investments may pay
interest or dividends, others will need to be liquidated in order to generate current income.
Different investment vehicles can have different tax implications. That's why it's important to formulate a withdrawal strategy that best suits your circumstances.
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Information contained in this presentation is based on sources which we believe are reliable, but are not guaranteed as accurate and complete.
Opinions expressed are current only and are subject to change without notice. The suitability of a particular investment strategy for an investor is dependent upon the investor's individual circumstances. As in all financial matters, investors are advised not to act without consulting their investment, tax and other professional advisers. |
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