Giant Steps

Plan ahead for a quality retirement

Are you ready for the day when you hang up the “Gone Fishing” sign and begin to enjoy your golden years? Well, maybe the joy of fishing isn’t your retirement dream, but have you thought about what your dream is and how it might be realized? Retirement planning isn’t about reaching a certain age any more but about building quality into the rest of your life.

The rest of your life turns out to be quite a bit of time. The Social Security Administration set the retirement age at 65 in 1936. If the decision was made today and you adjusted for our greater life expectancy, retirement age would be 79.

The average age of retirement today is an amazing 57. That leaves 30 years of life expectancy to go. Planning for that full third of your life takes on a whole new significance.

More and more people are viewing retirement as an opportunity to explore interests they didn’t previously have the time or resources to pursue. Rather than slowing down, today’s retirees are sometimes speeding up and beginning new careers or starting new businesses.

The important thing is deciding what kind of retirement will suit you best.

When to retire and what to do in retirement become very individual questions.

What happens to a couple with differing retirement feelings and goals?

My friend Hank was ready to close his accounting practice after a steady 35 years. His wife, Sharon, had just returned to the work place and wanted a few years to enjoy her late-start career. Hank was hankering to charter a boat in the Gulf of Mexico. Sharon was decorating her new office in a San Diego high rise. Obviously, they have some future plans to negotiate.

Asking yourself and your significant other some questions about retirement will bring the future into focus. Before taking on the all-important question of financing your golden years, give some thought to the psychology of this major life transition

First, ask yourself how you feel about work. If you have a job you really enjoy, how will you replace that enjoyment after you retire?

Next, think about your support system. Do you have or can you build a circle of friends and associates outside the world of work?

Finally, what do you do in your leisure time? Do you have plans and goals for future activities?

Everyone’s “Gone Fishing” sign will read a little differently. Make sure you know what spells quality of life for you as you start your retirement planning.

Saving Enough for Retirement remains a Complex Issue.

December 6, 2004- In 2012, more than 50% of U.S. investable assets, representing roughly $19.5 trillion, is expected to be in the hands of Americans age 60 and older, according to Fidelity Investments.

Though that may be a key fact, many Americans live in fear of outliving their retirement assets because they are not saving enough. And with Americans living longer, and some investors failing to manage their assets properly and make sound investments choices, that fear is certainly justified.

Marcia Mantell, vice president of retirement at Fidelity, said people should take a holistic approach when creating an income planning strategy since a “financially secure retirement begins with a solid income plan.” One should also start to save early to take advantage of extra years of compounding, she stated.

Realizing the opportunities available for advisers to grow their businesses, strengthen client relationships, and provide clients with income-planning strategies to combat any challenges they may face, Fidelity Advisor Retirement Income Services (FARIS) plunged into action.

FARIS has augmented its retirement planning program to include a workbook designed to arm advisers with an outline for developing new income planning strategies and customized retirement income plans for clients to ensure that their money will work for them throughout their lives.

Fidelity has also added an online seminar kit as another resource to broaden financial advisers� and prospects� knowledge and understanding of the risks that can thwart the success of an individual�s lifetime income plan.

The workbook, which is designed to work in conjunction with an adviser�s other income planning resources maps out a four-step approach, said Mantell.

First, it shows advisers how to assess a client�s current situation by calculating annual income and expected withdrawal rate. Second, it provides advisers with a method to calculate a client�s expenses gap and offers two strategic options to close that gap: either a systematic withdrawal plan or a guaranteed income stream with annuities.

If it’s years away, why worry about retirement now?

Because the decisions you make today could significantly affect your future lifestyle. Enough errors in judgment could put your financial security during retirement at risk. So, by avoiding the following mistakes, you may improve your chances for a financially secure retirement:

Waiting too long to start saving.

While it may be tempting to put off savings for retirement until you buy a house and pay for your children’s college education, this could be a huge mistake. Time is critical to the growth of your retirement account.

If you put other goals first and wait to start saving for retirement, you will miss out on the benefits of compounding during all the years that you weren’t saving. It’s almost impossible to make up the difference once you get a late start.

The ideal time to start saving for retirement is as soon as you are eligible to participate in your first employer’s retirement plan. It may be hard to save for something so far off when you have so many current demands on your paycheck. Start with a small amount every payday and increase it as your earnings increase.

With a good budget and a little discipline, you may be able to save enough to buy a house, send the kids to college and enjoy a comfortable retirement.

Following the crowd.

Your investment plan should be based on careful research and an understanding of your own risk tolerance and investment time frame. A qualified financial professional can help you make these assessments. Once your plan is in place, it is unwise to make spur-of-the-moment changes based on the latest investment trend.

In many cases, by the time a hot investment tip hits the airwaves, it’s too late to benefit from it. When you are saving for a retirement that is years in the future, you are a long-term investor and should stick to your long-term plan.

Becoming discouraged by short-term losses.

As a long-term investor, you should seriously consider including stock investments in your portfolio. Historically, stocks have offered the best chance for long-term returns that will stay ahead of inflation and help you achieve your financial goals.

However, stocks are risky and investors should be prepared for losses as well as gains. It would be a mistake to take your money out of an investment that you believe is experiencing a temporary decline because you might then miss out on the eventual rebound. If you have a significant number of years before retirement, your investments have a lot of time to recover from periodic declines in the stock market.

Be sure to consult a financial advisor when making investment decisions.

Under estimating your future needs.

With people living longer, healthier, more active lives, you may need more money during retirement than you anticipated. Depending on your lifestyle, you could need 80 percent � or more � of your pre-retirement income for many years after you stop working. And don’t forget about inflation’s potentially crippling effect on your purchasing power.

Figuring out how much you may need for retirement should motivate you to save as much as possible in your company’s retirement plan. The more money you save, the more money you have working for you, and the more money you are likely to have when you retire.