Don’t Drop the Ball - Financial Planning Continues After You Retire
Now that football season has come to an end, let’s look at the parallels between the game and finances. Many people see retirement as the end zone. They believe they will score a touchdown if they save and invest enough for retirement. But before you spike the football, keep in mind that while retirement is a huge financial goal, it is not the end. Your retirement could last well over 25 years, so planning should continue even after you’ve stopped working.
What’s Your Game Plan? You may need more income once you stop working. First, you’ll want to think about how you plan to spend your retirement years. If you are healthy and active, you may have plans to travel extensively or buy a second home. The next step may be to determine how much you will need on which to live. This may be difficult because your interests and activities may change over time, so your income needs also may fluctuate.
In The Huddle As part of the planning process, you’ll review your sources of income investments, retirement plans, Social Security, and savings. You may want to tap taxable sources before you tap funds in tax-deferred accounts. A financial advisor can help you determine the best strategy for taking your retirement plan payouts and the best time to begin drawing your Social Security benefits.
The Fourth Quarter After retirement, investing requires a different strategy from the one used before you stopped working. During this period, your goal may be to invest for potential long-term growth, while holding enough in fixed-income securities to provide you with a stable source of income. However, if you have too much of your portfolio committed to fixed-income investments, you could risk depleting your nest egg. On the other hand, if you have too much invested in stocks, you may be taking more risk than you should. You’ll want to strike the right balance between growth and income potential.
Call The Play When you’re deciding how much money to put into each type of investment, consider your retirement needs and your risk tolerance. Diversification will continue to be an important strategy for managing risk. And you’ll need to hold some cash and cash-equivalent investments to maintain liquidity.
Teamwork Could Be Your Winning Strategy Once you retire, the investment rules may change, but you’re still in the game. With the help of a financial advisor, you may be able to score the victory of a sound financial plan for your retirement.
Steve Cyr is a financial advisor with First Command Financial Services. Steve is graduate of the United States Military Academy at West Point and served eight years in the U.S. Army. You can reach him at www.firstcommand.com/advisor/SteveCyr
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