RETIREMENT PLANNING- TIME FOR A NEW STORY

Neal A. Deutsch, CFP^®

Published in Rivertown Journal, December 2008

Today more than ever before, you are the Captain of your own retirement planning ship. With changes in the world economic conditions, sub-prime issues, change in presidency and an overall low in consumer confidence in recent history, are you finding yourself in a bit of a quandary? Is your retirement plan still on track?

Retirement income planning and employee retirement planning has become somewhat of a conundrum in the recent year because of all of the changes that are surrounding us. Those with 401k and 403b tax sheltered plans are confused as to how to allocate the funds, and the fear of moving into all cash brings panic with the fear of missing the eventual upswing in the market. Classic allocations, split between equities, bonds and cash are a thing of the past, as well as the old buy and hold strategy.

Financial planners themselves are confused (and rightly so) as to what to tell their clients, putting further confusion onto the front burner and continually waking you up at 2:00 AM trying to figure out the retirement planning puzzle.

Planning for retirement (or being there already, for that matter) is not as much fun as it was cracked up to be. Let's look at the different stages that you may be in with regard to your retirement plan or financial plan: already retired, within 5 years of retirement and more than 5 years until that magic day.

If you are more than 5 years from retirement and have time on your side, you are the least affected by the current economic downturn. Your account will have time to recover, and regardless of the moves or choices that you made in the past year, you will have the luxury of time to see your account (hopefully) go back up, exceeding the balance before the downturn. In addition, you have had the opportunity to dollar cost aver¬age your monthly con¬tributions, therefore buying more shares at a reduced price, which will lead to more value in your account if and when (stop worrying-history shows it will!) the market values return. Keep making your contributions, and consult with your Certified Financial Planner™ as to the most appropriate allocation for your needs and objectives.

Within 5 years of retirement? As with the "young-un's" above, continue to make your contributions. Remember, although you may be retiring in 5 years, you won’t be spending the money in 5 years, therefore giving you the ability to recover in market value while you are sitting on that beach or driving that `63 Vette (hey... we always have to think positive!) Watch your allocation and consult with your financial advisor for the allocation that is proper and well within your risk tolerance and parameters. Remember: just because you are retiring soon doesn't mean the price of a loaf of bread isn't going to continue to go up. Most folks change their risk tolerance after an emotional fact, so no knee jerk reactions here. Continue to make sound, informed investment and financial decisions suitable to you and your family needs.

Already retired and worried? It's understandable- this is not what you signed up for. You didn't work for 40 or so years to have to consider going back to work at this stage in life, so this is a time to evaluate your income and outflows, standard of living, and how you may be able to make it through this temporary downturn and come back on top without having to make drastic decisions.

If you are shy about the market now, as with the younger set, speak with your financial planner and become more than ever an informed consumer. The investment marketplace has changed radically in the past few years with new products and services including new, guaranteed income programs to retirement folk. Study and read carefully-no one product or service is suitable for everyone.

I am asked regularly for copies of my past articles and columns for reference: at any time, they are all available to you by going to my website, www.chestnutinvestment.com and look in the "news" area. All of my past articles including our newsletters are archived for you and your reference. Check it out! Happy holidays to you all - may next year be the best yet!

Neal A. Deutsch is a Certified Financial Planner^™  & Registered Securities Principal, offering securities through First Allied Securities, Inc., member FINRA/SIPC.  Neal is President of Chestnut Investment Group in Suffern, NY, helping people with financial planning since 1984. Please feel free to call Neal at 845.369.0016 or email him with your questions at neald@chestnutinvestment.com. Visit his website at www.chestnutinvestment.com