Ask the Experts:

Fine-tuning your retirement plan

Suppose you are 20 years away from retirement. With a career to manage, children to raise and numerous other obligations, planning for the leisure phase of your life probably seems premature.

Now, flash forward ten years. Your vision of retirement is probably solidifying, and your expectations and needs are coming into focus.

Integrating your investmentss

You have probably been investing in a company retirement plan for years. Perhaps you are similar to many other investors who have accumulated a variety of unrelated and, possibly, incompatible holdings. At the time, each of the investment decisions may have made sense. But now, do all of your investment holdings make sense and meet your needs for the future?

Reviewing and reallocating

It is wise to review your goals and assumptions about what your financial needs will be in retirement. Are the income and expense expectations valid? If not, you should readjust your investments accordingly.

If your asset allocation strategy hasn't changed recently, did you make a conscious decision to stay the course, or simply fail to act? As you move closer to retirement, you will want to address what changes in your overall
investment strategy may be in order. For instance, does a greater need for income suggest that you add (or add more) dividend-paying stocks to your portfolio? Or, if you are more concerned about risk once you are no longer receiving a regular paycheck, should bonds play a more important role in your portfolio?

Finalizing your retirement plan payout strategy

Review your choices carefully. You may be allowed to keep your funds in the company plan for a period of time. You may take the cash in hand, pay taxes and invest it. Or, you may roll over your distribution to an IRA (restrictions, limitations, and fees may apply).

The latter allows your money to grow tax deferred until you reach age 70 1/2. But make

sure to arrange for a direct rollover from the company plan to an IRA. If you don't, and you receive the money in hand, your employer is required to withhold 20% of your payout for taxes.

Managing your real estate

With some luck (and advance planning), the mortgage on your home will be very low or paid off when you retire. Consider what steps you might want to take to free up the equity in your home.

If you don't need all your current living space, consider trading down to a smaller home. Not only will it provide you with more cash to invest, but it will also allow you to reduce some of your fixed expenses like property taxes, home maintenance and utilities.

Reevaluating your insurance needs

As you near retirement, a comprehensive review of your insurance is in order, especially your medical care coverage. What benefits, if any, can you expect from your employer? What will Medicare cover or not cover? What do Medigap policies offer you, and which one is the best in your situation? If you are a veteran, are there medical or prescription benefits that might be available to you?

Is your life insurance paid up? You may want to explore reallocating that expense to premiums on long-term care insurance (LTCI) coverage. LTCI can offer nursing, home care, and a wide range of coverage options. But the longer you wait to make a decision, the higher the premiums will be.

There's always more to do

Of course, there may be many more steps to take as you enter retirement. We've touched upon only a few of them here. Taking the time now to review your retirement plan will help ensure a happy, financially secure retirement.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The professionals at Southern Community Wealth Management can help you determine which investments are appropriate for you. For more information and options, call us at (336) 794-7832.