FLYING INTO A SECURE RETIREMENT

Timeline tips on investing before and after retirement

By William Jordan

So much in life swings on the hinge of retirement. Before one retires, it’s about growth, goals and a go-get-em’ attitude. After retirement, it becomes more about security, stability and a safety-first attitude. Our financial lives seem focused on reaching retirement and then sustaining our lifestyle from that point forward. With such a major shift, we would expect to see major changes in our approach to money and investing - but we would be wrong.

For my clients, we define retirement as the point at which you can do whatever you want regardless of your compensation. For most of us, short of winning the lottery or selling a successful business, this point of financial freedom reaches us gradually, with the finish line well in sight for many years. This means the shift in our financial goals, though significant, happens over a much greater period of time than most would think.

I have seen too many who approach retirement with the attitude of investing all or most of their assets in the stock market, until they retire, after which they shift much of their investments to bonds with a smaller amount in stocks. For those who have taken this approach in the 2000s, it has probably met with disaster. Approaching retirement requires a longer view and a more thoughtful approach to planning for the time when you transition from accumulating assets to spending the income (and possibly some of the principal) generated by those assets.

The major areas of adjustment usually begin with the question: How much should I have in the stock market? They end with the question: How much can I spend each year? Let’s consider these issues through the decades of life both pre- and post-retirement. If I used the analogy of landing a plane, the 50s would usually be considered the approach to retirement phase, the 60s the actual landing into retirement, and the 70s the taxiing of enjoying a smooth income phase.

A PRE-RETIREMENT VIEW

As we approach retirement, we should begin to adjust our investment posture, just as a pilot adjusts the plane to begin a slow, predictable and safe descent. We should begin slowing down a bit, coming into a straight line with our target goals and avoiding any surprises.

Financially, this means throttling back the risk. Whereas in our 30s and 40s, we may have been pushing our portfolio to maximize returns (with all the risk that entails), we should now begin to focus more on a predictable level of returns rather than trying to squeeze out all the gains. At the same time, we can’t simply shift all into CDs or ultra-safe investments, which would be the equivalent of shutting down the engines while the plane is still 50 miles from the airport.

The rule of thumb for adjusting our risk has long been to take 100, subtract your age, with the result being the percentage of your portfolio which could be invested in stocks. While pointing out that no simple formula can design an ideal financial strategy, I would suggest if one did nothing except follow this calculation, it would improve the financial plan of many folks reading this article. With professional guidance, there is far more to consider, but for the layman, it’s an excellent place to begin.

During this approach phase, keep in mind we still need to maintain growth to provide income well into our 80s. In fact, if you expect to reach 65 in decent health, you may find you have a 50-percent chance of seeing 90. As longevity is increasing, we need to plan to live 10 or even 20 years longer than most of us assume we will.

REACHING RETIREMENT

In the five years immediately preceding and following retirement, the shift is more psychological than financial. The obvious and most dramatic effect is the moment we begin withdrawing income instead of contributing to our principal. However, I would stress this: If you need to adjust your portfolio allocation the day after you retire, then it was far too risky prior to retirement.

In a perfect landing, the transition from the air to the ground is almost imperceptible. While it isn't possible for it to go unnoticed, it is possible for it to be a non-event financially. Your plan and your planner should be well prepared. In most cases, you can have an income check automatically deposited into your checking account on the same dates and in the same amounts as when you were working. Make adjustments up or down for the needed income, but then enjoy the consistent income available to you from your years of savings.

A final thought on retirement income. I have often heard the rule of thumb to take your pre-retirement income and expect to need 80 percent. This rule I would say is worthless. Just as every airplane and every airport is different, so is every couple or individual. This means you have to think and plan ahead for your unique needs, not for what some fictitious average person is going to need. Make sure your plan fits you, and then enjoy it.

LIVING IN RETIREMENT

Once on the ground, you still need your engines to keep you moving, just not as much as while in the air. This means that many, although not everyone, will keep some money in the stock market. Evaluate carefully just how much you need in stocks to plan for life twenty years or more down the road.

In retirement, it’s all about maximizing your safe income. While 2011 is often regarded as a horrible interest-rate environment, we have found that many savvy investors can safely generate incomes in the five to eight percent range with an extraordinary level of safety.

The benefit of low interest rates is they usually accompany low inflation rates. This means if you can earn a nice interest rate, say six or seven percent, then you can significantly outpace inflation, much more so than that same interest rate could back when you were earning that in CDs. In short, low interest is the friend of the smart, retired investor.

THE MINDSET FOR BEFORE AND AFTER RETIREMENT

In all circumstances surrounding retirement, what is most important is limiting risk. I stress with our clients, and encourage every reader, to think of having four different accounts to fund your income.

The first account funds, with very safe and low-risk investments, your full income need for the next five years. If you spend $5,000 a month ($60,000 a year) then you will need $300,000 in your first account. If this was your “mattress money,” you would be certain of your income for the next five years.

The second account funds years 6 through 10, with only a slightly higher level of risk. Likewise the third account funds years 11 to 15, allowing for a little more risk as needed.

The fourth account is the replenishment account. The purpose of this account is, every five years, to replace the funds that have been spent. As a result you always have four accounts going and you always have your greatest risk in your fourth account, and your greatest safety in your first account.

This may be a slightly more complex topic than can be easily understood in a single article. As a result, our firm offers a monthly maximum-income workshop on a complimentary basis to all readers of “Life After 50.” Simply call our e-mail our office to register.

As a final word, there are several more things which can be considered. It can be allowable for you to spend a limited amount of principal to fund lifestyle after retirement, with that allowance increasing slightly as you grow more mature. Likewise, there are more options for generating income, or growing your money safely than can be covered in this article.

All safe flights start with a great pilot. You need someone you can trust, and who knows how to fly in a storm, at the helm of your retirement plan. Meet with your pilot on a regular basis, perhaps using this article to engage in a helpful discussion of your retirement plan. May your skies be clear and smooth. Happy landings!

William Jordan is a nationally recognized wealth manager and speaker on financial and investment topics. To ask a question or request a personal financial review meeting, contact his office at (949) 380-8600 or click on www.WilliamJordanAssociates.com.

“LIFE AFTER 50” BOOMER AND BEYOND FINANCIAL SERVICES DIRECTORY

THE JEWISH FREE LOAN ASSOCIATION OF LOS ANGELES

The Jewish Free Loan Association of Los Angeles (JFLA) is a nonprofit agency offering interest-free loans to people of all faiths in the Greater Los Angeles area for emergencies, education, healthcare, small-business development and life-cycle events. JFLA loan programs change lives and save lives and work to promote self-sufficiency with dignity. For more information, please call (323)761-8830 or (818) 464-3331 (valley office) or click on www.JFLA.org.

THE LAW OFFICE OF RICHARD J. BASMAJIAN &. ASSOCIATES

A specialist in will and trust disputes, non-litigation alternatives and conflict disputes, Richard Basmajian will keep you out of court. With over 30 years of experience as a California-licensed attorney, he is dedicated to getting your matters resolved quickly. Too many families have been torn apart by well-meaning estate plans that fail to properly address current family and legal issues. When someone you care about passes away, the last thing you want to spend your time doing is litigating will and trust issues with family members. Litigation is stressful, expensive, can take years, and can ruin relationships. If you are already in court, Richard Basmajian can take steps to get your issues resolved out of court. If you are frustrated by the way a trustee or executor is handling matters, call him now. Located at 15300 Ventura Blvd., Suite 305 in Sherman Oaks, call (818) 986-1235 today for a free consultation.

WILLIAM JORDAN ASSOCIATES

William Jordan is a nationally recognized financial advisor specializing in the unique financial needs of seniors. William’s advice to seniors has helped them pay less in taxes and increase their income while reducing the risk they take in their investments. Most financial planners briefly discuss and identify goals, set asset allocation, search for high returns and monitor performance. William Jordan Associates goes a step further – they build relationships and design a financial road map for each client based on his or her collective dreams and goals. They audit the plan’s probability, customizing and monitoring it for changes in goals. Then they continually communicate with their clients on the plan’s performance – ensuring it stays on the road mapped for success. Whether you are 41 or 71, you have goals, and nearly all of them involve money. Don’t let that stand in your way. William Jordan Associates will help you get there, wherever your “there” may be. Call (949) 380-8600 or click on www.williamjordanassociates.com

THE LAW OFFICES OF MITCHELL A. KARASOV

The Law Offices of Mitchell A. Karasov is a unique elder law firm with a holistic approach to estate planning and dispute resolution combining elder law and elder care. Their services include Long Term Care Estate Planning, Medi-Cal eligibility and recovery, trust administration, probate, conservatorships of person and estate, estate and trust litigation and financial abuse litigation. With offices located at 5352 Laurel Canyon Blvd #100, Valley Village, CA 91607 and 5900 Wilshire Blvd 26th Floor, Los Angeles, CA 90036, call them today at (818) 508-7192 or (310) 294-5920. You can also get more information by clicking on www.karasovelderlaw.com, info@mkarasov-elderlaw.com

THE LAW OFFICES OF JONATHAN W. EVANS & ASSOCIATES

Jonathan W. Evans & Associates specializes in helping customers who have been burned by their stockbroker, and sustained investment losses as a result of broker misconduct. With 34 years of experience and named four times as a “Super Lawyer,” Evans offers free initial consultation and no recovery, no fee services. Call now at (800) 699-1881 or click on www.www.stocklaw.com

GENERATION MORTGAGE COMPANY

Can you afford retirement? A reverse mortgage could be an option. With the aging of our population and the anticipated financial needs of American homeowners 62-plus, it’s understandable why a reverse mortgage from Generation Mortgage is a retirement option whose time has come. “Reverse mortgages are a critically important financial tool for seniors seeking financial security and independence,” states Phil Goss, reverse-mortgage professional. “With healthcare and other living expenses on the rise and income and retirement assets limited, seniors need as many financial options as possible to maintain their financial independence. At Generation Mortgage, we will continue to offer seniors financial products that help them live in their homes longer and give them financial flexibility. And our goal is to always provide A-plus customer service.” Phil Goss, NMLS#162804, and the Generation Mortgage Company Southern California office is located in Glendora at 146 N. Glendora Ave, Suite 105. For more information with a free DVD, call (866) 359-1592 or click online for a free estimate and customer testimonials at www.generationmortgage.com/philgoss.

Better Business Bureau A-Plus accredited. Equal Housing Lender. Licensed by the Department of Corporations under the California Residential Mortgage Lending Act; NMLS# 1319; © 2011 Generation Mortgage Company. All Rights Reserved.

L.A. ELDER LAW – THE LAW OFFICES OF JOSEPH C. GIRARD

Whether in their offices, through the courts, or at your home or nursing home, The Law Offices of Joseph C. Girard provides seniors and their families with quality legal support and a network of providers to fill their many needs through Medi-Cal planning, asset protection, estate planning, litigation involving elder issues, conservatorships, special needs planning and elder abuse. Since 1974, they have helped many people save their homes and assets from loss due to the overwhelming expense of hospital and nursing home care. They plan their estates in such a way that their beneficiaries receive family assets economically. For more information or to schedule an appointment please call (310) 823-3943 or click on www.LaElderLaw.com.

ASSET INTELLIGENCE

Asset Intelligence is your trusted guide to a safer and richer retirement. At Asset Intelligence, they believe in one absolute and that is that they do not have the right to lose their clients' money. Unlike other firms, they never recommend any accounts that place your hard-earned money at any type of stock market risk. That doesn’t mean your money will not grow – it just means it will grow without risk. They provide their clients with guarantees – guarantees of principal, guarantees of interest gains, and guarantees of lifelong income to name just a few. They also show their clients how to eliminate and reduce taxes through the use of tax-deferred and tax-free accounts especially effective for any money being passed on to beneficiaries. Asset Intelligence is a firm that believes in guarantees and stands by their motto: “We do not have the right to lose our clients' money.” Please contact them at (800) 968-8021 or click on www.assetintelligence.com for more information.

DA/CA FINANCIAL GROUP

DA/CA Financial Group was established to provide individuals, families and companies with a single source of financial guidance. For financial planning, tax services, real estate and mortgages they can help you achieve your financial goals. Call today for a free consultation with one of their experienced professionals at (877) 560-DACA or (858) 560-0366. You can also click on to the Web site at www.dacafg.com for more information.

AMERICAN FAMILY ADMINISTRATORS

Ronaldo Pontremoli (CA Lic. No. 0660926) is the founder of American Family Administrators (AFA), a national financial and insurance planning firm headquartered in Laguna Hills since 1983. Serving individuals, small businesses, corporations, estates and trusts, the company’s primary objective is to assist clients in reducing taxes, increasing income and protecting assets within the limits of the law. AFA provides understanding and assistance in the use of income-retirement planning, banks, annuities, life insurance, long-term care, Medicare, Medi-Cal, asset-protection methods and veterans benefits. They also have relationships with attorneys who are certified in the areas of elder planning, estate planning, trusts and taxation, along with strategic partnerships with specialists in the areas of retirement and estate planning. All management and financial planning associates affiliated with AFA are professionally licensed either through the State of California, California Bar Association or the California Department of Insurance. They maintain an ongoing relationship with the Better Business Bureau (I.D. No. 85001311) National Ethics Bureau (NEB) National Care Planning Council (NCPC) and other community organizations. American Family Administrators is located at 23046 Avenita De La Carlotta in Laguna Hills. For further information, call (800) 733-6120.

GRACE M. DASCANIO OF BANKERS LIFE AND CASUALTY COMPANY

Has Medicare got you confused or frustrated? Are you concerned with the rising costs of healthcare? Do you worry about long-term-care costs should the need arise? What about Life Insurance – Do you know why you need it? Do you have enough? Are you unprotected from life’s unforeseen times of trouble, cancer, disability or unexpected hospitalizations? If the answer to any of these questions is yes, Grace M. Dascanio of Bankers Life and Casualty Company can help. Grace M. Dascanio’s goal is your goal – to have adequate healthcare, independence, peace of mind and most of all, security in retirement. Unexpected injury or illness can have devastating effects on individuals and families without safeguarding your hard-earned assets and health. Providing customized planning and cultivating long-term relationships takes the worry from recovery and keeps the focus on maintaining your quality of life. In the insurance business since 1879, Bankers Life and Casualty Company offers Medicare supplement insurance, Long-Term Care Insurance, home healthcare insurance, annuities, life insurance, IRAs and drug discount cards. For more information, e-mail Grace M. Dascanio at grace.dascanio@bankers.com or call (858) 722-0513. Grace M. Dascanio ARM, WCCP, licensed insurance agent for Bankers Life and Casualty Company, CA License 0G40573, 5333 Mission Center Rd. Suite 310, San Diego, CA 92108.

ARAMCO MORTGAGE, INC.

If you’re a homeowner, your greatest financial asset is the equity in your home, and thanks to the new Home Equity Conversion Mortgage (HECM), homeowners’ aged 62 and older can withdraw some of their home’s equity as a government-insured reverse mortgage. With a reverse mortgage, you can tap directly into that resource to live a more worry-free life. If you’re approved, you can get rid of your mortgage payment for as long as you live in your home. You can use the funds you get from your HECM reverse mortgage to remodel your home, or help defer the cost of healthcare. You may also receive additional cash to hold in reserve or spend however you wish. You also choose how you want to withdraw your funds — as a fixed monthly sum, a line of credit, or a combination of both. And there’s no need to pay back your loan until you move, sell your home, or your estate is settled. Aramco’s team of financial counselors is trained to discuss your specific eligibility and give you the knowledge you need to make an informed decision about whether a reverse mortgage is right for you. Reverse mortgages have improved the quality of life for hundreds of thousands of homeowners. For more information, click on www.AramcoReverse.com or call (888) 600-1130.

SHAW, MOSES, MENDENHALL INSURANCE

Since 1988, Shaw, Moses, Mendenhall Insurance has offered their clients custom, comprehensive and cost-effective solutions. A full-service agency where you will find professionals to handle your insurance and financial needs, they pride themselves on serving clients with a “big picture” approach to insurance planning. At Shaw, Moses, Mendenhall Insurance, they help you obtain the correct policies by partnering with a large number of premier carriers to provide you, your family, or your business with the ideal package of insurance services and coverage in all essential areas including, personal, auto, homeowners, umbrella, flood, inland marine, business, property, liability, workers compensation, life, health, medical, dental, Long-Term Care and disability. Shaw, Moses, Mendenhall Insurance is now offering a special, exclusive discounted auto-insurance program in your area. This program has extremely low pricing with extra benefits including coverage that will never be dropped and discounts that extend to every member of your household. For more information, see their ad in this issue or call (626) 710-1355.

“Life After 50” Finance Directory

ADVANCED TRUSTEE STRATEGIES

5405 Morehouse Drive, Suite 340, San Diego, CA 92121, (858) 643-5757, www.sandeep.v@atsfinancial.com

AMERICAN FAMILY ADMINISTRATORS

23046 Avenita De La Carlotta, Laguna Hills, CA. 92653 (800) 733-6120

ARAMCO MORTGAGE, INC.

www.AramcoReverse.com, (886) 600-1130.

ASSET INTELLIGENCE

18552 MacArthur Blvd #450, Irvine, CA 92612, (800) 968-8021, www.assetintelligence.com

LAW OFFICES RICHARD J. BASMAJIAN & ASSOCIATES

15300 Ventura Boulevard Suite 305 Sherman Oaks, CA 91403 (818) 986-1235

BENN REALTY SERVICES

4444 16th Street, Lancaster, CA 93534, (800) 801-5556, www.bennrealtysvcs@aol.com

DA/CA FINANCIAL GROUP

(877) 560-DACA or 858-560-0366, www.dacafg.com

GRACE M. DASCANIO/BANKERS LIFE AND CASUALTY

grace.dascanio@bankers.com or call (858) 722-0513. 5333 Mission Center Rd. Suite 310, San Diego, CA 92108

THE LAW OFFICES OF JONATHAN W. EVANS & ASSOCIATES

(213) 626-1881, (800) 699-1881 or (818) 982-1881, www.stocklaw.com

GENERATION MORTGAGE COMPANY

146 N. Glendora Ave, Suite 105, Glendora, CA 91741, (866) 359-1592, www.generationmortgage.com/philgos

LA ELDER LAW- THE LAW OFFICES OF JOSEPH C. GIRARD

(310) 823-3943 or click on www.LaElderLaw.com.

THE JEWISH FREE LOAN ASSOCIATION OF LOS ANGELES

(323)761-8830 or (818) 464-3331, www.JFLA.org.

WILLIAM JORDAN ASSOCIATES

23332 Mill Creek, Suite 260, Laguna Hills, CA, 92653, (949) 380-8600, www.williamjordanassociates.com

THE LAW OFFICES OF MITCHELL A. KARASOV

5352 Laurel Canyon Blvd #100, Valley Village, CA 91607 and 5900 Wilshire Blvd 26th Floor, Los Angeles, CA 90036, (818) 508-7192 or (310) 294-5920, www.karasovelderlaw.com, e-mail info@mkarasov-elderlaw.com

LEGAL PRODUCTION SERVICES

(805) 581-9192, www.lpstrust.com

ONE REVERSE MORTGAGE

(800) 655-8533 www.onereversemortgage.com, or e-mail at clientcare@onereversemortgage.com

SHAW, MOSES, MENDENHALL INSURANCE

(626) 710-1355.

THE STROM GROUP, LLC

(951) 506-9605.

THE TRUST PROS

15127 Morrison Street, Sherman Oaks, CA, 91403, (866) 993-0299, www.thetrustpros.com, e-mail: michaelcrupi@aol.com