Retirement Resources

Last column we spoke about the need to create a retirement plan. The starting point for you is to create an income statement and a balance sheet. That way, you can see where you are in order to plan for the future.

Now, we want to take that income statement and balance sheet and project what it will look like in retirement. To begin, let’s look at some of your retirement resources.

Everyone gets a social security statement. When was the last time you checked the accuracy of that statement? Is the income reported on your statement correct? Once you have verified the accuracy of the statement, you can see what the retirement benefit will be at various retirement ages. Take that income into account in your projected retirement income statement.

Pull out your 401(k) statements or, if you have more than one, everything you have. The majority of working people have their retirement savings in 401(k) plans through their employers, and you have investment choices. Make sure they meet your present circumstances and your retirement goals. What do I mean by that? Well, we have previously discussed the critical importance to all investors of the concept of “asset allocation.” Basically, that means spreading out your investment risk across various types of investments – cash equivalent investments like money market mutual funds, equities that move with the market like mutual funds, corporate bonds that will pay you interest, etc. Your investment portfolio should look like a pie with many slices representing different types of investments. The theory behind this allocation of assets is simple – if one investment goes down, another may go up.

What do your investments look like in your 401(k)? If you are a young person, you can afford to take more risk with your investments because you have time to work and replace losses. But, if you are older and are getting ready for retirement, you do not want to take more risk. You want your investments to be more secure since you will not have the time to replace any losses. That’s why evaluating your investments in your 401(k) is so important when you are getting ready to retire.

Once you have retired and left your employment, what do you do with your 401(k)? At that point, your 401(k) can be “rolled over” into another tax-exempt vehicle like an IRA. And, you can obtain different investment options when you roll over. If employers have provided restricted investment options to you, your best course is to choose a roll over.

Of course, personal savings need to be taken into account in creating your retirement income statement. But, have you included inheritances in your numbers? The boomer generation will benefit from the largest inter-generational transfer of wealth in history – if you are anticipating an inheritance, list it.

Real estate is another retirement resource.

Although the market value of real property has declined in recent years, you can anticipate some increase in property values over the coming few years. If you have more than one property, you may consider selling or renting that property. You also should look at the value of your current home. Refinancing to a 15-year as opposed to a 30-year mortgage may give you a paid off property at retirement. It is time to start looking at those options.

What about your small business assets? Did you know 90% of small business owners have absolutely no transition plans in place? Basically, that means when the business owners dies, the business dies. If that business has made income for you, how about figuring out how you and your family can continue to make income from the business after you retire and when you die?

Finally, don’t discount the value of working after retirement. Even if you plan on working for lesser income, the income you do receive from continuing to work may be able to provide you with a much better retirement.

Lyn & TeddyAbout the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.

About the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.