Retirement

&

mar
2016

MESSENGER POST MEDIA

ESTATE
PLANNING
Calm Confidence
5 ways to a worry free retirement

Worrying doesnt empty tomorrow of its troubles it

empties today of its strength. This quote by Corrie Ten
Boom captures one of the most important messages I
convey to my clients who are nearing and in retirement.
However in a rapidly changing world with fluctuating
markets, geo-political, uncertainty, and social changes
it seems that there are many things to fear. Fear based
decisions are not usually wise decisions. To develop calm
confidence in retirement it is wise to develop a solid
strategy that addresses the top five financial and emotional
risks we will face in retirement. Getting old isnt for sissies,
so lets get ready!

Outliving assets
Outliving my assets is the number one concern of retirees.
Life expectancy for a 65 year old male is 17 years, a 65 year
old female is 20 years. There is a 50% chance at least one
member of a 65 year old couple will live to age 95.
Some strategies that can help address this concern are
to eliminate debt; and continue working during semiretirement.
It is also wise to limit withdrawals in the early years of
retirement. Many people make the mistake of turning
income producing assets into major purchases that
depreciate in value. The motor home, sports car or second
home purchase should be thought out. Often renting
before deciding on a major purchase can work well.
Its also important to understand the potential advantages
and disadvantages of withdrawing money from tax
advantaged versus taxable accounts. Fully understanding
the required minimum distribution rules that apply to tax
advantaged accounts is critical.
Timing and integration of Social Security is also an
extremely important decision.
If you are a participant in a pension plan the pension option
decision should be fully understood and evaluated.
If your monthly sources of retirement income such as social
security and monthly pension benefit are not sufficient to
pay your core monthly expenses consider using a portion
of your retirement nest egg to purchase an income annuity
that will guarantee you and/or your spouse a life time
income.

Inflation and taxes

Inflation and taxes are the next concerns we will address.
Inflation does not retire when you do! Over the last 25
years inflation averaged around 3%. If that continues going
forward what cost us $100 today will cost $150 less than 14
years from now.
Because of this it is important to evaluate asset allocation
strategies. There is a tendency among retirees to opt
for safe investments such as money market funds and
certificates of deposit. These strategies often do not provide
returns that are able to outpace inflation and taxes. After
you have set aside emergency funds sufficient to handle
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6-12 months of retirement living expenses you should

consider an investment portfolio consisting of equities,
bonds and alternatives consistent with your risk tolerance
and time horizon.

Loss of a spouse or loved one

Loss of a spouse or loved one is obviously a major concern.

Do you have a will and or a trust? Are they up to date and is
the attorney who drafted them available and comfortable
with your current circumstances? Have you had a recent
review of your life insurance policies to be sure they
are funded properly and will stay in force through your
life expectancy? Are your beneficiaries up-to-date and
tax efficient? Do you know how income streams from
Social Security or pension will be affected if your spouse
predeceases you?

Healthcare and long term care

Healthcare and long term care are the fourth areas we will
address. The cost of medical care has outpaced inflation
for the last 20 years and most predictions are that this will
continue.

Retiree health insurance plans are the exception rather

than the rule in 2016. If you have one be sure you
understand the options including the options to change
benefits and cost. For most people over age 65 there is
original Medicare Part A and B which can be supplemented
by Part D which is the prescription drug plan. Medicare
Advantage and Medicare Supplement plans are also
available and should be considered.

One of the largest fears most retirees have is requiring long

term care during their retirement years. This a legitimate
concern as current statistics estimate that a 65 year old will
have about a 40% chance of needing long term care. There
are three things we can do with this risk. Avoid it, absorb it
or transfer it. We can avoid it by staying active and healthy
and not engaging in high risk behaviors such as climbing
ladders, etc. We can absorb it by having sufficient assets
and we can transfer it by having long term care insurance.
We can also work with an experienced elder law attorney
for asset protection strategies.

Work with people you trust

Working with people you trust is the last of the five

concerns we will address. I believe it is extremely
important that you develop a team of advisors who
both know enough and care enough to help you. Those
advisors could include an attorney, accountant, financial
planner, health care specialist and funeral director. I favor
working with local credentialed advisors who give back to
their communities.

It has often been said that faith is the opposite of fear. I

believe that faith is taking action, in spite of your fear. Take
positive action on these five areas, one step at a time, and
you can have a worry free retirement. Enjoy the journey!
Arnie Pechler, Certified Financial Planner/ Senior Advisor
Arnie has been helping people make smart money decisions
for over 35 years. He can be reached at (315) 502-4183.

Retirement & ESTATE PLANNING march 2016