“I
recently had a medical issue and spent some time in the hospital.
My doctor advised me to consider a senior community because
of all the help with everyday things. Boy was he right. I’m
so glad I listened to him.” – Kathleen
Financial Planning For Seniors
First
Step - Reality Check - Retirement Savings
According to EBRI's 2007 Retirement Confidence
Survey, America's workers say:
• 70 percent feel very or somewhat
confident that they'll have enough money to afford a comfortable
life in retirement.
• 66 percent report that either they or their spouse
have saved something for retirement.
• 68 percent are "not at all" or "not
too" confident that Social Security will continue to
pay.
• 13 percent have no idea how much money they'll need
for retirement.
• 49 percent of those who have not saved are nevertheless
confident about a comfortable retirement.
• 49 percent of workers of all ages have less than
$25,000 in retirement savings.
Many recent articles say there is a big disconnect in what
how people perceive they are prepared for retirement and
the actual facts about how much they have saved. By all
account people have not saved enough for their retirement.
Unlike our parents, social security may not be there forever.
So the first step is accumulating assets and savings.
Retirees
- Avoid Risk and Perserve Assets
Don't all feel like to putting all our hard
earned assets in a bond and forgetting about it. You feel
like reducing all risks for your investments when we are
nearing retirement but experts say that is not a good thing
to do. If you put all your assets in bonds, treasury's or
CDs then you can get a fixed rate return. But rates changes
and the time when you need to roll over maternities may
be the time when rates have dropped, maybe considerably.
Then your returns will be much lower. Also inflation will
cut into that interest you have been receiving making the
purchasing power a lot lower.
Some stocks in your portfolio should help
you keep pace with inflation. There are many no load balanced
funds like Oakmark Equity Income Fund - OAKBX and American
Century Equity Income - TWEIX, that will help your portfolio
keep pace with good returns while offering low risk to market
declines. Also with the dropping dollar, a good idea is
to put a portion of your portfolio in a hard currency fund
like Mark
Hard Currency Investor Shares - MERKX, a no-load
mutual fund that invests in a basket of hard currencies
from countries with strong monetary policies assembled to
protect against the depreciation of the U.S. dollar relative
to other currencies.
Also keeping
your portfolio well diversified with Asset Allocation is
a key element in your long term success. Investing in broad
categories of investments such as stocks, bonds, real estate,
hard currencies, and money market funds will help you stay
diversified and balance your returns to lower risks. Pick
up a good book about Asset Allocation like "All About
Asset Allocation" by Richard A. Ferri, CFA and this
will give you everything you need to know about the subject.
My good friend Jim McCoy, somewhat of an
investment guru, recommends the following asset allocation:
ASSET CLASS
MODERATE %
AGGRESSIVE %
S&P 500 17%
17
24
Mid & Small Cap
15
22
Micro Cap
2
3
International
11
16
REIT
5
5
5 YR. Treasurys
40
25
Cash
10
5
100
100
Keeping a balanced asset allocation is harder
than it sounds. You may want to sell if the market tanks,
or buy after it has done really well. An even consistent
plan seems to be the best.
2009 Update: Actually cash is great in a
deflationary economy which is what we have right now. Short
term US Treasury bonds is a place to be until we see interest
rates go higher, then you can extend the bonds.
SeniorCommunityGuide.com
Before you speak, listen. Before you
write, think. Before you spend, earn. Before you invest,
investigate. Before you criticize, wait. Before you pray,
forgive. Before you quit, try. Before you retire, save.
Before you die, give.
William A. Ward
