ONE FOR THE MONEY

A primer on financial planning

Entering retirement and planning for your financial future can be a daunting task. With the uncertainties that lie ahead, it’s easy to be unsure of the right moves to make. But the process doesn’t have to be complicated. With a checklist of “must-do” items and the guidance of a finance professional, you can play out your retirement dreams without worrying about the future.

It is important to first note that financial planning, whether during or before retirement, is not stagnant. “Financial planning is a process, not a product,” says Stephen J. Cross, AIF®, CRPC®, president and LPL registered principal of Cross Financial Strategies, LLC. “It’s more important to establish a ‘framework’ toward the ongoing financial planning and monitoring process than simply looking for someone to spend a few hours with you only to supply a nice, wire-bound financial plan that is static in nature.That is, it’s not monitored, reviewed and updated as time goes on. More people think of and expect the latter than the former when approaching financial planning. That’s a big mistake, in my opinion.”

Once you have chosen a financial advisor and are committed to monitoring your portfolio, develop a budget. “You’re going to be moving to a fixed and less variable income soon, so figure out what you really need versus what you really want during retirement,” says Cross. “A general rule is for the typical retiree to be able to pull four to five percent out of their investment assets over the long run without depleting their entire nest egg. So, if a retiree desires a $50,000 per year retirement income goal and has approximately $20,000 of Social Security income to count on, this retiree will need approximately $30,000 of extra income per year to fill this gap. Therefore, his or her portfolio assets at retirement should be around $600,000-$750,000. Of course, you can always withdraw more than 4-5 percent, but then your chance of success goes down as well.”

Edward Jones financial advisor Anson Sobers notes, “If you think a senior living community is in your future, have a financial advisor do a financial assessment. The biggest threat to the senior portfolio is lack of planning for long-term care.” Sobers adds that though people don’t like discussing the possibility of long-term care, the odds are high that it will be needed.

Aside from one’s financial portfolio, there are legal matters that need to be managed before and throughout retirement. Attorney Byron L. Woolley of Woolley Wilson LLP, whose practice includes probate law, suggests that retirees make sure their estate plans are exactly as they want them. “Many people forget to revisit their estate plans when someone has passed away and inheritance is received,” says Woolley. “Make sure to review and update your will, especially in cases where executors have passed away. I always suggest my clients appoint an executor and a backup.”

Other important directives that need to be in order at this time are the HIPAA release, which determines to whom your health information can be released; the Directive to Physicians, which allows you to instruct your physician not to use artificial methods to extend the natural process of dying; Financial Power of Attorney, which appoints someone in charge of your finances if you become incapacitated; and a Medical Power of Attorney, which designates a person to make healthcare decisions on your behalf, should you be unable to do so.

Meet the author

Young Courtney Roberts , author of “Uh-oh Cat,” and Carol Brickell , author of “Cinco the Clinic Cat,” both appeared in the July 2011 Advocate and got to meet each other at a recent book signing at My Office in Lake Highlands.