7 Cardinal Rules to Retirement Planning


By Home Business Magazine

A cash flow analysis will identify spending patterns and help ensure that you have sufficient income to support your retirement lifestyle. 

Carl Edwards, a highly credentialed consultant and owner of C.E. Wealth Group, (http://www.cewealth.com), reviews seven essential points that everyone should know regarding retirement planning.

•Avoid trying to time the market. Markets often move in cycles and some investors believe that they can boost their investment returns by buying at the bottom and selling at the top. The problem is that investors are terrible at correctly predicting market movements, and multiple studies have shown that market timers usually end up with significantly smaller retirement savings than buy-and-hold investors.

•Use risk-appropriate financial vehicles. Retiring can be a risky business. The days of relying on employer-provided pension plans are largely over, and retirees now have to deal with risks including investment, inflation, healthcare, longevity and others. Though the total elimination of risks isn’t possible, we can manage many of them through competent retirement planning and a clear understanding of factors like your goals, time horizon, and financial circumstances.

•Invest in the most tax-efficient manner. While taxes are just one piece of the overall financial puzzle, it’s important to structure your investments so that you are able to keep what you earn.

•Complete a cash flow analysis. Retirement will involve major changes to your finances. Sources and timing of income will change and financial priorities may shift as you start generating income from retirement savings. A cash flow analysis will identify spending patterns and help ensure that you have enough income to support your retirement lifestyle.

•Guarantee your required income. For many retirees, having income that is not subject to market fluctuations is an important part of their retirement plan. Many will have at least some level of guaranteed income from Social Security or defined benefit pension plans. However, if you are worried that your expenses exceed your guaranteed income, a financial advisor can help you explore options for additional streams of income for life. Guarantees are subject to the paying ability of the income provider.

•Utilize longevity planning. Today’s retirees are living longer than ever, and many worry about outliving their assets. Longevity planning is about preparing for a happy, comfortable, and independent retirement and can help ensure that your wealth lasts as long as you need it to.

•Consider the effects of inflation. Inflation is one of the biggest issues facing retirees because they are disproportionately affected by rising prices. Escalating food, fuel, and medical costs can devastate a retirement portfolio unless these costs have been factored into your planning. Positioning your retirement portfolio to fight inflation is critical to ensuring adequate income in retirement. HBM

Carl Edwards, MBA, ChFC®, is a Chartered Financial Consultant® and is the owner of C.E. Wealth Group, (http://www.cewealth.com). He represents High Street Asset Management as an Investment Adviser Representative and Calton & Associates, Inc. as a Registered Representative. Edwards is also a licensed insurance agent in Life, Health, Medicare Supplement and Long Term Care insurances. 

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