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Dudley's Paw Prints

Retirement Can Be Ruff

“It is not how much that you have saved, but how much that you will spend.”

I hope that everyone had a wonderful holiday! I received two Kong’s, one bone, and a ball in my stocking and I got to see all my relatives, including my eldest cousin- Sir Herman Piggles, an Old English Bulldog and the most handsome member of our family. At 100 pounds, he is also the biggest!

Since the topic this month is about retirement, Herman Piggles will be our guest writer. He is much older than me and should have a better perspective. – Dudley

“There are many things to worry about when it comes to retirement: increasing health care costs, a potential stock market correction, and changes in Social Security and Medicare regulations to name a few, but the biggest concern by far per a recent Allianz poll is running out of money.” – Herman

Herman’s Hints on How to Achieve a more Secure Retirement:

The time to plan for retirement is not at my ripe old age of eight, but at Dudley’s age of two. To create a secure retirement that will be able to withstand the changes that will invariably occur, such as poor health, economic downturn, or lifestyle change, you will need to start early. I started burying bones at a very young age, and I have amassed a stockpile.

Knowing when to retire takes a lot of pre-planning which often is neglected. You should start at least five to seven years prior to leaving your job. The best way to gauge whether you will have enough assets to retire (in conjunction with your social security benefits) is to perform regular financial check-ups long before your retirement date.

There is so much talk about when to retire, and many people deliberate whether they should retire at 62 or 65 or work into their 70’s. What they do not realize is that there is no magic age to retire, but only a “best time” to retire which is when you are financially ready and capable of maintaining your standard of living without having to work.

Identify your goals and objectives. As you get closer to retirement, you will need more than a vague idea of what retirement will entail. What do you envision regarding travel, hobbies, and your bucket list? Can you afford it? Make sure that you have talked to your spouse and that you are both on the same page.

Monitor on a regular basis whether you are hitting your savings goals for retirement. If you have a financial setback or you are behind in your target, be prepared and disciplined to take action whether it is by increasing your retirement contributions, taking advantage of catch-up contributions after age 50, working longer, or deferring that big purchase. Also, the optimum time to pay off debt is when you are still receiving a paycheck.

Many people ask how much is required to save for retirement but unfortunately, there is not a magic number and every situation is different. The amount to save will depend on your age, how much you earn, when you would like to retire, your current savings, your health, and many other factors. And, most importantly, what you will spend. The most successful couples are the ones that live within their means, before and after retirement.

Work with your financial advisor to put together a comprehensive retirement plan that outlines the sources of income and the amount of income that can be generated from your investments to last your expected lifetime. There are numerous distribution strategies that can be applied at retirement. The long-standing 4% withdrawal rule is only one of many approaches to income withdrawal.

In most cases, you will need to continue to include stocks and stock funds in your portfolio at retirement. With the current low bond yields, high health care costs, and potentially increased future inflation, a diversified balanced portfolio of bonds and stocks is often required to meet your needs. Determining the right balance can be determined by a risk analysis that will help you create an asset allocation that you are comfortable with.

As I have often said to the young pups, “Don’t just bury your bones in one spot (401-k), but bury your bones throughout the yard, so that you have multiple bones (Roth IRA, taxable account) to choose from if you lose one. By having different buckets of money, it will allow for various distribution options to help minimize taxes, and create liquidity.

Much time and effort is focused on the accumulation of assets pre-retirement, but very little time is spent on determining the level of spending and expenses that will occur post-retirement.

You will need to make important decisions regarding the timing of receiving Social Security benefits, Medicare and other health insurance, distributions from your retirement plans, care facilities vs remaining in your home, and numerous other lifestyle choices.

Be prepared for a change in lifestyle and give some serious thought to the life you would like to lead when retired. Though I can no longer romp with the young pups, I still take my master for his daily walk and keep to a regular schedule. Whether it is volunteering, downsizing your home, working part-time, or hanging out with the grandchildren, take the required steps that will help you prepare for a happy transition and create a meaningful retirement.

If you develop goals and plan ahead, retirement does not have to be ruff- it can be all that you hope for and a new adventure!! – Sir Herman Piggles


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