Managing Your Money During Retirement (for everyone who hopes to retire someday)

The Estes Valley Library is providing this program through a grant from the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and the American Library Association (ALA). The grant is distributed as part of the smartinvesting@your library® initiative, an ALA program. This project is in its sixth year of educational partnership with libraries across the country Marsha Yelick CFA(retired) Financial Programs Consultant myelick@estesvalleylibrary.org 970-586-8116 Ext 831

If you ever needed a plan for your money, you need it in retirement! You earned it. You saved it. Now it’s time to keep it safe and spend it well. The simplest choices are the best. Major themes du jour When you retire, you have to figure out how to make you existing money last for the rest of your life. It’s never too late. Spend only what you have!

Is the Average American Ready for Retirement? Average amount saved.. Retirement Readiness Personal savings rate...

Percent of US population by age and sex, The boomers changed everything… Retirement Redefined Percent of US population by age and sex, 1970, 1990 and projections for 2010

Retirement Challenges What are the Current Challenges of Retirement in 2010? Bear Market of 2008 Real estate depreciation Rising Taxes Fixed income yields decline Possibility of inflation Living longer Rising medical costs Complex financial products Etc……… Retirement Challenges http://www.urban.org/publications/901206.html

What are the BASIC retirement planning needs? Gather your information

Seminar 1 You need to... 1. Update your current Net Worth Statement 2. Create a New Budget – Using PROJECTED Retirement Needs (You will need this for the calculators!) Seminar 1

3. Readjust your Allocation INCOME or CONSERVATIVE (Use allocation rules of thumb with the funds necessary to support your budget. Use simple investing for this part of your money.) 50-year-old 50% BONDS (7.5%) 60-year-old 60% BONDS (7%) 70-year-old 70% BONDS (6.5%) 80-year-old 80% BONDS (6%) Seminars 2&4

Spending in Retirement Put it together… How long will your money last? Spending in Retirement

Work on an estimate... Paper & Pencil

The 3% Solution... Paper & Pencil

How Long Will the Money Last? This chart depicts the average rate of annual withdrawals that a hypothetical portfolio of 60% U.S. stocks and 40% bonds was able to sustain during a series of 30-year holding periods since 1926. The average sustainable rate for all 30-year rolling periods from 1926 was 6.21% when adjusted for actual consumer price inflation. Source: Standard & Poor's. Why 3-4% is Safe 3%

The Calculators Online Calculators Play with many scenarios until you get a sense of How inflation changes things How withdrawal rates can extend or shorten your nest egg How supplemental income enhances the life of your money How total return damages or enhances your money The Calculators Revisit the calculators when the market – or your circumstances – change, so you can make necessary adjustments to your budget.

Use the Calculators Common ASSUMPTIONS… What about 50% of retirees saved… $100,000 Living in retirement (age 60 to 90)… 30 years Inflation rate - historic… 3.5% Earnings rate of conservative... 5% Use the Calculators

Seminar 4 Remember MUTUAL FUNDS (Seminar 4) THE ADVANTAGES: Diversification Economies of scale Convenience Professional management THE DISADVANTAGES Limits opportunity for a “home run” Limits control of taxable gains/losses Can only sell at close market EXPENSES (front end, back end, annual…) Seminar 4

Seminar 1 & 4 Remember BOND Mutual Funds (an economical way to own bonds) Buy some short, medium, and long term bond funds Look for lowest fees Consider inflation- protected bonds for a portion of retirement funds Reinvest interest (dollar cost average until you need the income) Seminar 1 & 4

Are You Ready? Are you Ready to RETIRE? Emotionally ready? Financial Nest Egg size? Income Stream analyzed (budget) Health Insurance evaluated? No debts outstanding? Children secure financially? Are You Ready?

Spend the income to enjoy a well-deserved retirement! Manage your retirement IN COME Know how much you have to spend each year (IN COME). (Use a draw down strategy and budget) Spend the income to enjoy a well-deserved retirement! Have sufficient liquidity (emergency cash) Watch inflation (stock allocation helps you keep pace) Monitor (and consolidate) your accounts (allocation and returns) Use the calculators once a year to check your position Protect and grow any unused income Income Management

Stretch your retirement OUT GO Exemptions Discounts Low Fees Comparison Negotiations Barter Review All things free... Ask your friends Spending Management Small things ADD up and make a BIG difference!

Major Changes And if that doesn’t work... Move Get rid of Stuff Get a Job Lose a Car Decrease vacationing Share shelter Find FREE things The Peace Corp Major Changes Big changes make HUGE differences!

Be a happy, money-wise SENIOR Happy Retirement

Thank you for attending Be Money Smart for Life Thank you for attending