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PostWysłany: Sob 2:08, 16 Paź 2010    Temat postu: What does my retirement look like in 15 years

The Star-Ledger asked Howard Hook, a certified financial planner and certified public accountant with Access Wealth Planning in Roseland, to help Henry take a look at his retirement prospects.
“For someone Henry’s age, with a time frame of 30 or maybe even 40 years, his investments, especially during retirement when he will need to draw income from them, need to ultimately outpace inflation,” Hook says.
Without the inheritance and the additional savings, Hook says, the retirement projection shows that the investment return necessary for Henry to retire in 15 years would be close to 8 percent rather than 5 percent.
“As a single person, naming the right people to handle these roles becomes extremely important since there is no spouse to assume the role,” Hook says.
Henry, whose name has been changed, has saved $100,000 in an IRA, $680 in a 401(k),Cheap sports jerseys, $28,000 in an IRA annuity, $35,000 in a money market and $2,000 in checking. He also says he expects an inheritance of about $100,000 by 2015.
And with life expectancies increasing, it is not uncommon for people’s expenses to inflate to 2.5 times what they originally were when they first retired, he said, and that doesn’t include additional expenses for unexpected illnesses, long-term care needs and the like.
It’s something of a gamble to rely on investment returns for retirement success.
Assuming Henry is able to save the excess cash flow each year, he receives an expected inheritance of $100,000 in 2015 and using a 5 percent rate of return on his investments, Hook says retirement projections show Henry would be able to retire in 15 years.
“If this is indeed true, he should contribute that to his 401(k) plan since he will receive the equivalent of a tax deduction for the contribution,” Hook says.
Hook recommends Henry go back to his check register for the past few months and examine expenses more closely.
But it’s not that simple, and Hook has two main concerns.
Hook’s second concern is the likelihood of an inheritance. He said he doesn’t usually like to use inheritances as part of retirement projections because of the uncertainty of when the money is available, and the difference between what the beneficiary expects and actually receives.
“Markets behave as they do and those relying on the market for success often succeed or fail based solely on timing,” Hook says. “Those people retiring at a market peak may face having to go back to work, downsize or take even greater risk with their portfolios. Those retiring at a market bottom may find their chance of success greater.”
Hook says a review of Henry’s expenses shows he should have an additional $7,500 to $9,000 of cash flow ― funds that appear to be unaccounted for. Henry currently invests 5 percent of his salary, or $2,150 a year, into his 401(k) plan with his current employer. If he can track down this extra cash in his budget, he could save significantly more.
First, if Henry can’t find the extra funds in his budget for retirement savings, his projections won’t be the same. Adding $7,500 of expenses a year rather than an additional $7,500 of savings show that while he still would be able to retire and live comfortably, his asset base would decline more rapidly. As Henry approaches 20 years of retirement, he may run out of money or have to change his lifestyle, Hook says.
“If indeed there is extra cash, he may want to set up an automatic investment program each month to capture that excess,” Hook says. “Of course,nfl sales, increasing the amount he contributes per paycheck to his 401(k) is in essence the same thing as an automatic investment program.”
“Am I saving enough for retirement? What does my retirement look like in 15 years?” Henry asks.
Hook says Henry’s asset allocation of 70 percent equities and 30 percent fixed income is appropriate. He also suggests Henry make sure he has the proper estate planning documents in place. He says everyone, married or not,football uniforms, should have a will because without one, your estate will be distributed according to the laws of the state.
More importantly, Hook says, Henry should have a power of attorney, a health care proxy and a living will. These documents will allow for care both financially and medically in the event Henry becomes disabled.
Henry knows retirement will cost money. At 52, he wants to make sure he’s doing all he can to set himself up for the future.
Hook says in determining an appropriate allocation, the key to remember is that the time frame for needing the money does not end when you retire.

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