It’s All About the Strategy
Tough questions to ask yourself before retirementby Barry L. Unterbrink
Americans have experienced a huge change in their thinking the past 7-10 years in how we view our money in retirement, and it may affect our pocketbooks for years to come.
First think back 25 years or so; you worked for one employer, retired after 20-30 years, and collected a defined benefit or pension for your lifetime. In the 1970’s qualified plans (IRA’s, etc.) were developed and became popular as an option to save and invest, normally with your employers blessing and match of dollars in some cases. Non-salaried people could also then enjoy some savings as well through IRA’s. Employers generally loved these new options, as they began to phase out their benefit plans, transferring the risk and management of their retirement savings onto their employees shoulders. The good news: the trillions of dollars today sitting in IRA’s, 401k’s and similar retirement plans is a testimony to Americans’ discipline to save for their future when they leave the workforce.
More recently, year after year of low interest rates have affected our ability to "earn" enough to offset inflation and taxes. New challenges face millions of workers today on a number of fronts.
First, how do I effectively manage my money? What’s a proper strategy to use? What are prudent allocations of money between stocks, bonds, cash/other to use at various ages. What's a fair fee to pay? How much employer stock is appropriate to own? Do I have an exit strategy with my money; when to sell or reduce the risks? 2008 taught us about risks in stocks, down 38%. So did 2001-2002.
Next, how do I turn on a source of income from my "pot" of money when retiring? What will interest rates be? Tax rates? What are your options when you need the money to live on? How much can be taken each month without running out of money in the future? What if I retire when my account balances are down? When will that happen next?
I apologize if I’ve left you with more questions than answers today. There are solutions in the financial markets and through the banks and insurance companies that can will help you "get a firm" handle on your retirement money now and when you need it the most. My next post will address some solutions before year-end. So stay tuned at http://moneyruminations.blogspot.com
Barry L. Unterbrink
Chartered Retirement Planning Counselor