Life Your Way Life Your Way No two clients are the same. At SecurEstate, we truly believe that. But we also recognize many people tend to experience remarkably similar emotions as they near retirement. In fact, one scenario plays out quite regularly in our office. A married couple comes to see us for the first time. They’re going to retire soon – or, at least they hope they are. They’re feeling a little nervous (and definitely out of their comfort zone). Perhaps they’re wondering if they should have done this years ago. The meeting begins as the couple drops an unwieldy stack of papers on the table. It’s a hodgepodge of financial products, insurance plans, and 401(K) statements. As we work our way through the documents, questions arise: “Do we have enough money to retire?” “We’d like to retire in two years. Can we?” “How do we compare to other people our age?” They’re all fair questions. But they’re based on the assumption that there’s just one kind of retirement. In reality, your retirement plan should be founded on your own unique lifestyle – not some generic template. So to address these concerns, it’s important for us to get a clear picture of a.) your retirement lifestyle expectations and b.) your financial ability to support those expectations. Your Retirement Lifestyle Expectations For some, the perfect retirement consists of mornings on the golf course and afternoons in the backyard – with plenty of recliner time in between. For others it’s summer in the Midwest and winter in the Sunbelt, along with a heavy dose of excursions to far-flung exotic locations. Of course, these are two extreme examples. In actuality, most people tend to fall somewhere in the middle. The point is, one dream retirement may cost more than another. Once we develop a clear picture of what you what your retirement to be, we’ll understand the income necessary to support it. Your Financial Ability to Support Those Expectations Statistics say that a person who retires at 65 will live past age 83.* That’s 18 years. And when you consider continued advances in healthcare, it could be even longer. But length of retirement is just one factor to consider when assessing a client’s financial needs. At SecurEstate, we look at a host of factors, including: -Inflation – What car were you driving 18 years ago? What did it cost? What were you paying for groceries? The cost of living obviously goes up, and any well-designed retirement plan must take that into consideration. -Distribution Rate and Investment Strategy – The distribution rate (the percentage of your nest egg that is distributed annually) has to be supported by an investment strategy consistent with that rate. Simply put, if you are earning 4% in CD’s and you are distributing 6% each year, you may run out of money. -Volatility – Conventional wisdom says to buy and hold stocks for the long haul. But conventional wisdom isn’t always right. Most retired people living on their assets can’t afford to take a large financial hit. If too many of your assets are exposed to risk, you could be one bear market away from a very unfortunate situation. The peak of the last bull market occurred on October 22, 2007. From that high point, the US markets dropped by approximately 60% until March 9, 2009. When you combine a 60% drop in value with a 6% distribution rate over that 16-month period, the account would have lost approximately 68% of its value. So, for every $100,000 in the account on October 22, 2007 there would only be $32,000 remaining on March 9, 2009**. That amount ($6,000 a year), if left unchanged, would now represent over an 18% distribution rate. Simply put: good recovery or not, the money may soon be gone. In Summary A number of factors will affect your retirement strategy. And as time goes by, those factors will change. That’s why, at SecurEstate, we take a proactive approach to assessing our clients’ needs on an ongoing basis. If you’re ready to talk about your retirement plan, we welcome you to contact us. *Source: Center for Disease Control and Prevention. Health, United States 2008, Table 26. **U.S. market measured by the S&P 500 index. Indexes are unmanaged measures of market conditions. It is not possible to invest directly in an index. Past perform is not indicative of future results.