MONEY [CONTINUED FROMPAGE 61]
When. Figuring out when to use one choice over another is tough. We can only read articles from respected people in the field, keep tabs on current economic events, and understand some history about economies and markets. But don’t focus on current fads as the baseline for your decisions.
That’s why you have to follow the media with a healthy dose of suspicion. The media don’t mention anything until an investment has done something to create a newsflash-worthy story, and by that time, it’s too late for investors. But that doesn’t stop sales people from coming out during the periods of euphoria to take advantage of the buzz.
Look at the bigger picture of society and the world. What are the big economic conditions? Is housing in a slump or peaking? Are interest rates up or down? Is unemployment up or down? Is construction on the rise? Are consumers in a buying or a saving mood? Remember these events are temporary. Will a housing slump last forever? Is a down market something to fear, or does it represent a chance to get in on the ground floor of something good? Figure out how much time you have to wait in your portfolio and how you can situate other portfolio choices to offset or balance the choices that will take time to rebound.
Can you prevent the need to deal with all these issues? Sure. If you are a ways from retirement, save and invest to have assets beyond your future needs. If you are close to retirement or already retired, establish a retired living standard well below your means. Plan to have no debt and very few other payments going into retirement. Or choose to live in a lower-cost area. If you already are retired, consider working at least part time to subsidize your income, thereby minimizing the need to pull from your assets.
Working in retirement provides more options for how you manage your retirement assets. You can reduce the withdrawal amount from your assets, which allows you to reallocate your portfolio to capture more growth. Aside from the money issue, working keeps you busy, exercises your mind, and provides you a purpose in life. Chances are your spouse could use a break from having you around all the time, too — no matter how charming you are. We’ve just scratched the surface of money management and portfolio considerations. It’s good to know there is an assortment of choices to build a custom plan suited to every person’s needs and goals.
MO
— Lt. Col. Shane Ostrom, USAF (Ret), CFP®, is a benefits information expert in MOAA’s Transition Center.
APRIL 2013 MILITARY OFFICER 79
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