26
PALM TREE
Financial Fitness by Laura Martin
Where Your Money Lives How and where you put your money to work is one of the largest areas of influence you have. In fact, asset allocation decisions affect total portfolio risk more than any other factor, according to “Determinants of Portfolio Performance,” a study published in the Financial Analysts Journal. Work with your advisor to position assets and centralize as many investment income resources as possible to potentially reduce fees.
How Much You Spend And Save
Saving as early – and as much as possible – along with thoughtful spending is completely in your hands. Personal savings and income from working during retirement are expected to play a larger role in funding retirees’ futures. Prioritize needs over wants. Your advisor can help you decide on a withdrawal rate for a long and fulfilling retirement.
How Long You Work
In the past, Social Security and company pension plans were enough to fund retirement. While you may want to work in retirement nearly half of retirees leave the workforce before they planned to due to health concerns, caregiving responsibilities, or company changes.
Your Health
While you don’t know what will happen, you can increase your chances for a long, healthy life through better healthcare, preventative care, and good nutrition. Living longer means longer retirement horizons – and concern for outliving your savings.
The What-Ifs
No matter how much you try, there are always unknowns to face – such as an unexpected health event – that you can’t exactly plan for. But you can build a contingency plan by creating a financial cushion should you need cash on short notice and by mitigating risks with proper insurance coverage.
Even with a shorter time horizon, retirement isn’t the time to swing for the fences and take on unnecessary risk to attempt to make up for losses. Instead, talk to your advisor about ways to boost or diversify income streams.
The Cost Of Living And Taxes
Things cost more over time. The inflation rate for retirement-age Americans is higher because they spend more on items that rise fastest in price, such as healthcare and housing. Taxes can also eat up a chunk of your retirement income. Without knowing when the government may implement a change that may affect you, be sure to take advantage of savings in tax-favored accounts, particularly those geared toward retirement.
Your advisor can help you stay ahead of the game and implement a plan that reflects what’s most important to you.
Asset allocation does not guarantee a profit nor protect again losses. Opinions expressed in this article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice.
Sources: Employee Benefit Research Institute, Matthew Greenwald & Associates, Inc. 2015 Retirement Confidence Survey. Data as of March 2015. J.P. Morgan Guide to Retirement.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S. 26 ELDER LIVING GUIDE
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