Strategies for Rescuing Your Retirement

9/15/2012 7:00 AM

Work with a <\n>Financial Advisor

Although there are many “do-it-yourself” resources available, none can replace the experienced, personalized service a financial professional can provide. A professional advisor, preferably a certified financial planner practitioner, has the experience and resources to offer an understanding of not only your investments, but also your complete financial picture. Additionally, in periods of market volatility when you often need support the most, a financial advisor can provide access to important decision-making information and research, monitor your investment portfolio while anticipating your changing needs, and develop a comprehensive plan for retirement that takes into consideration your other financial goals — such as education funding and estate planning — while addressing market volatility and what the changing markets mean for you.

Have a Plan

Developing a financial plan is one of the best ways to meet your long-term goals. Your plan should also include a plan to address inevitable market volatility, help you establish realistic goals, and manage expectations in “what if” situations. Your plan should be monitored at periodic intervals as well as whenever changes in your life warrant a review and/or modifications to your plan.

Invest Regularly

If you are still working, saving part of your income for retirement is an excellent way to rebuild savings that may be depressed by market conditions. Your investment can buy more shares of lower-priced equities and other securities that may temporarily be “on sale” but show good promise and potential. If you don’t feel comfortable investing in more equities, you can choose investments with less risk for your new contributions. Ideally, you would want to generate an asset allocation analysis to ensure that your financial holdings, both inside and outside of your retirement accounts, are working together to provide you with a well diversified portfolio that meets your needs and risk parameters.

Consider Working Longer

As the unemployment rate remains elevated, holding on to a good-paying job that brings in regular income can be your lifeline prior to — and even during — retirement. The combination of working longer, continuing to save and invest, reducing spending and delaying Social Security benefits could significantly increase your retirement income. Just as part-time work allows many individuals to find a comfortable balance between their work and personal lives, part-time retirement can help control the uncertainties of financial markets by providing an extra cushion of income to fund the pleasures of your retirement.

Understand Your Cash Flow

Keeping track of where your money goes can give you a better picture of how long your retirement fund might last or how long you might need to save. Ideally you would want to have a minimum of 2-3 years of spending history so that you can better understand what expenses you are currently incurring and plan accordingly for any expenses that may change during retirement. Understanding your cash flow prior to retirement is crucial in order to avoid any unpleasant surprises once the retirement decision is made.

Consolidate Accounts to <\n>Simplify Management

Bringing all your financial assets together can help clarify exactly what resources you have, where they are being spent, and how you might manage and invest your funds more effectively. Consolidating retirement accounts, such as IRAs, is particularly important prior to the commencement of Required Minimum Distributions (RMDs) at the attainment of age 70½. Multiple retirement accounts often lead to missed distributions and/or withdrawing less than the amount required, resulting in substantial additional taxes and penalties that otherwise could have easily been avoided. Working with a knowledgeable professional who properly understands your unique individual circumstances as well as relevant rules and tax issues not only may provide additional personal comfort, but also reduce the risk of costly mistakes.

Editor’s Note: Kevin J. Smith is the grandson of the late Walter J. Smith, a skilled farmer and investor from Fawn Grove, PA to whom this column is dedicated. He is First Vice President-Wealth Management with Janney Montgomery Scott, LLC, a full service financial services firm that is a member NYSE/SIPC and FINRA. Kevin can be reached at 800-999-0503, website at, or via email at kevinsmith<\@>

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