"There's hope!" That's the good news from
financial experts Frank Armstrong and Paul Brown. In their new book, "Save
Your Retirement," they outline five different scenarios for replanning your
retirement, for those of us 15, 10 or five years away from retirement or
those of us who have reached retirement age or five years beyond. One option
is to reconsider your date of retirement. Perhaps you do not want to remain
at your current job and instead are thinking about a second career.
Whatever your employment decision, the authors emphasize that your
retirement rescue efforts should not make the situation worse. The pitfalls
to avoid include quick investments that are too good to be true, credit
cards dangerous to your financial health, not maintaining the tax advantages
in your IRA, ignoring your estate plan, succumbing to the lure of annuities
and failing to keep an emergency fund.
"Working With the Scenario That's Right for You"
Part Two of the book contains expert guidance and advice for those of us
approaching retirement in the future or considering retirement at this
moment. As the authors point out, the more time you have until you retire,
the more options you have to ensure success. Part of those options revolves
around the authors' "six magic dates." They are as follows: age 50 (you
start using the catch-up provisions in pensions); age 55 (some retirement
plans allow early withdrawals without a penalty); age 59 1/2 (certain IRS
retirement rules become applicable); age 62-70 (when you can start your
Social Security benefits); age 65 (welcome to Medicare); and age 70 1/2 (you
must take minimum distributions from your tax-deferred accounts).
"(Dramatically) New Thinking"
You have done everything to improve your retirement options and secure
your future. But what happens if other assumptions or guarantees that you
are counting on fail to materialize? What happens if there is a problem with
Social Security? What will you do if your level of risk proves to be
hazardous to your financial health?
In that case you may have to reconsider your planned retirement date. You
may have to think about whether a time-tested plan to spend 4 percent of
your money each year creates the danger of outliving your money.
[to top of second column]
Assessing risk is an essential part of any retirement portfolio.
The authors remind us that the secret is to assume the right amount
of risk at each stage of your investment life. Remember their
admonition: "If you take too little risk in your portfolio, you will
never accrue enough to meet you goals. If you take too much risk, a
market downturn could deplete your accounts to the point where you
might never recover." The secret to managing risk is to divide your
portfolio into a risky part and a risk-free part. Risk-oriented
investments include stock and other equities, while risk-free
investments include financial instruments such as CDs, Treasury
bills and bank deposits. It is this attention to risk and its
influence on your financial decisions that will ultimately determine
when you can retire and at what level of financial comfort.
The authors write that "retirement should not start until you
have that capital in place." They explain: "If you reach your target
retirement date and don't have your target capital, you are not
at your retirement date."
As for the carnage of the stock market collapse of 2008-2009?
Armstrong and Brown are bullish on the long-term viability of stocks
and their place in your portfolio; in fact, they believe that "down
the road, the current economic situation will be a distant bad
memory. ... It's hard to imagine that we won't look back on this as
a great buying opportunity. Why wouldn't you want to take advantage
"Save Your Retirement" is a timely and welcome addition to the
new books on retirement management and how to recover from the
financial meltdown. Josh Hyatt of Money Magazine writes: "Convinced
the sinking economy has dragged your retirement plans down with it?
‘Save Your Retirement' shows there's still treasure inside that
wreckage -- and provides a map to help you find it." This book is
recommended to anyone contemplating retirement or seeking solutions
to rebuild their retirement portfolio after the recent collapse of
the financial markets.
[Text from file received
from Richard Sumrall,
Lincoln Public Library District]