Investor Education | When does retirement planning start?

Once you finally reach retirement, you may take a deep sigh of relief.  However, because the average person retiring at age 65 can expect to live about an additional 20 years—or even longer —retirement planning cannot end when you are no longer working.  This becomes even more critical if you decide to opt for an early retirement.

To help provide some financial security during your retirement years, review the main aspects of the following three key areas:

  1. Investments:  Naturally, retirees tend to invest rather conservatively.  Of course, some degree of caution is advisable for  your retirement years.  But an overreliance on fixed income investments may backfire due to continued inflation and a longer life span.  As a result, the nest egg you have built up might not be enough to sustain your chosen lifestyle.

    Caveat:  Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Consider all the relevant factors and seek professional assistance.
  2. Insurance policies:  During retirement, be sure to review your insurance policies to determine what type of coverage (if any) you require and the amount.  For instance, your health care insurance needs may change as  you get older, especially when you consider the rising cost of health care.  If you are receiving some  form of health care insurance coverage from a former employer, make sure you (and your spouse, if you are married) have adequate coverage.

    Although you may be entitled to Medicare coverage in retirement, the benefits under this government program may not be sufficient.  And, of course, the laws in this area might change in the future.

    Similarly, you may want to review your life insurance and disability income insurance policies after you have retired.  Coordinate these issues with other parts of your estate plan.
  3. Wills and trusts:  The will you made out years ago may no longer meet the needs of your family.  Throughout your retirement, take the time to review your will.  The same principle holds true for any trust arrangements you may have established.

For example, your will may need to be revised in light of changes in the estate-tax laws. In addition, you should consider whether you want to make lifetime gifts to reduce the size of your taxable estate. Finally, you may want to review the beneficiaries named in your will, especially if your personal circumstances have changed.

Although retirement is meant to be relaxing, you must keep a close watch on these three key areas. In other words, the answer to the question of when retirement planning finally ends is “practically never.”

This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.

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