Retirement on the Horizon
Lee Rosenberg, CFP | May 11th, 2009Back in the early nineties, I wrote a book called, RETIREMENT READY OR NOT: How to Get Financially Prepared in a Hurry (Career Press). At the time, the news was filled with reports of corporations folding, downsizing or merging, forcing employees all over the country to accept early retirement long before they expected.
Today there is an eerie similarity to this economic climate, albeit it is a little more dire and complicated due to the declining real estate, credit and financial markets. But not only are corporate employees affected, so too are teachers and administrators. School systems dealing with severe budget shortfalls are offering early retirement packages, and/or are informing those who have completed a certain number of years of service that they have reached the maximum benefits and should plan to retire.
If you are among those who are getting ready for retirement in a hurry, here are some important tips:
1. Pay off as much debt as possible, particularly credit cards and any high interest expenses that could deplete your nest egg or strain your monthly overhead.
2. Review your pension plan and seek advice on your options and how best to take your payout.
3. For those of you taking 401k payouts, consider the tax on the payouts and protection for the beneficiaries. Also, revise your investments to allow for monthly income if you need monthly cash flow.
Note: School systems and government employees still have the traditional defined benefit plans which pay a monthly fixed amount. However, at retirement, this payout must be adjusted (lowered) to protect a spouse with a survivor benefit, extending your pension beyond the employee’s life expectancy but reducing the monthly payout on a percentage basis.
4. Consider your real estate options- trade down, relocate, pay off your mortgage, rent vs. buy, share your home with family.. these are a few of the alternatives that can lower your living expenses or generate income, depending on the strategy. Speak to a knowledgeable real estate professional to learn more about what might work best for you.
We have always recommended to our clients to “practice” retirement a year or so in advance. In other words, start adapting to your new lifestyle so that the changes feel gradual. Create a new budget, learn to live on less and don’t forget to plan for how you will spend your new free time.. Retirement is the art of spending time without spending money.
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Tags: 401k, economy, lee rosenberg, retierment, retire, retirement
About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.
