Preparing for Good Times and Bad


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The 1990's were the longest period of economic prosperity in U. S. history. What goes up, must come down and in 2000 the economy cycled back downward. Business cycle and market fluctuations are outside of your control.

Here are several powerful strategies you can use to help manage your retirement portfolio in any economic climate. An appropriate asset allocation, retirement plan and insurances can together create a financial strategy to help your savings last a lifetime.

Asset Allocation Review

Are you positive that your funds are distributed appropriately among asset classes such as stocks, bonds, cash, and real estate? Your risk tolerance, target retirement date, and overall financial situation also needs to be taken into consideration.

Allocations traditionally become more conservative as retirement approaches. Even retirees may want to earmark a portion of their portfolio for growth investments, such as equities, in order to safeguard it from the potential effects of inflation.

Plan Withdrawals Carefully

When it is time to create an income stream from your portfolio, remember that there are regulations governing withdrawals from tax-advantaged retirement plans such as traditional IRAs, 401(k)s, and 403(b)s.3 Although you must begin taking the required minimum distributions (RMDs) by age 701/2 new rules simplify how RMDs are calculated. If you have a pension or other sources of income, you may be able to withdraw less, while easing your tax burden, and leaving more of your retirement fund intact to continue growing tax deferred.

Health-Care Options

The cost of nursing-home stays and home health care has risen dramatically, potentially affecting the millions of retirees who will someday require long-term care for an injury or chronic illness. Owning a long-term-care insurance policy can help protect you from a dangerous cash drain during your retirement years.

You may need help implementing these strategies and should speak with your financial planner. At some time in the future you will be glad you were proactive about preserving your retirement funds.

Roger Sorensen

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