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Developing a strategy for retirement

April 07, 2016

Retiring Your Way


Even if you are several years away from retirement, it’s not too early to start gathering facts, weighing choices and mapping out your tax and investment strategy. Here are eight suggestions that should help you organize your planning.

1. Be cognizant of the Social Security and Medicare benefits that you will receive.

You can receive a reduced Social Security benefit any time after reaching age 62, however, those benefits will be markedly reduced for your lifetime. The full benefit, shown on your annual Social Security estimate statement, will be yours when you reach “Full Retirement Age.” FRA is 66 for those born in 1954 or earlier and then gradually rises to age 67 for those born in 1960 or later. The age applicable to you depends on your year and month of your birth and is shown on your estimate statement. You can apply for Social Security at your local Social Security office or on the Internet at a few months prior to your intended retirement date. Remember Social Security benefits are a guaranteed source of income with a cost of living increase and probably one of your most important income sources.

You can begin receiving Medicare benefits, covering a substantial part of your health care costs, at age 65. Information on coverage and the application process is available by telephone at 1-800-MEDICARE or on the Internet at

2. Develop an investment strategy.

Conventional wisdom for retirees stresses the need to play it safe. Usually the approach recommended is to reduce risk and enhance income. But few investments are risk-free. Rising living costs can make even fixed-income investments look, in hindsight, like a risky investment. Your investments should be geared to your own financial picture, your risk tolerance, and your own tax outlook.

3. Estimate the size of your retirement account.

You’ll want to have a ballpark figure of the future value of your retirement savings, with the additional contributions. UBT has some great calculators at When entering an expected annual return use a conservative percentage, like 5-6%, and remember there is no guarantee when dealing with the markets, whether it’s the bond market or the stock market.

4. Calculate the amount of possible income your account could generate.

Generally, experts recommend starting with a withdrawal rate of something like 4% or less in the first year, and continuing withdrawals along those lines with a cost of living increase when necessary. Whether you set up the Rollover IRA or leave the dollars in your company plan you can continue to shelter income earned in the account, until you are required to begin making withdrawals at age 701/2. Those Required Minimum Distributions (RMDs) are calculated on the account balance on January 1.

5. Determine who will oversee your investments.

Your own background and tempera¬ment will determine the best way to manage your investments. With leisure time, you may enjoy monitoring your portfolio. On the other hand, you may want to travel or pursue new interests, and you’ll want to put your portfolio in the hands of a professional investment manager. Perhaps you want to do it yourself but would like a second opinion. Your plan Financial Education Consultant can explain the many choices available.

6. Plan for the unexpected.

Many people are concerned about more than the management of their portfolio after retirement. They have questions such as: What happens to my finances in the event of my disability or prolonged illness? How can I provide for continuing income and support for loved ones after my death? One possible answer is to consult a trust officer about a living trust — a comprehensive, long-term investment plan that can help resolve these concerns.

7. Look for ways to augment your retirement capital.

Usually the last years before retirement are years of peak earning power. Contribute as much as you can to tax-deferred retirement plans, such as an IRA or a company 401(k) plan.

8. Stage a “dress rehearsal” for retirement.

Estimate your monthly income and monthly expenses. If you believe that your expenses will be less, take that into account.

Then try living for a month, now, on what you plan to live on later.

Of course, financial planning won’t be the only planning you need to do. You may want to look for a new place to live, make extensive travel plans or take up the hobby that you’ve never had time for before. Whatever the anticipated pleasures of retirement are, you’ll enjoy them all the more when you know your financial future is secure.

© 2016 M.A. Co. All rights reserved.
Any developments occurring after January 1, 2016, are not reflected in this article.

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.