Retirement Newsletter May2008

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Retirement Newsletter May2008 Powered By Docstoc
					                                                                      SENIOR FINANCES
                                                                     SPECIALIZING IN WEALTH MANAGEMENT AND ASSET PRESERVATION
                         PUBLISHED BY
                         DENNIS G. WILLIAMSON, CSA                                                      FOR MATURE INVESTORS
                         CERTIFIED SENIOR ADVISOR
                         REGISTERED REPRESENTATIVE                                                                                          MAY 2008
                         J.P. TURNER & COMPANY, LLC
                                MEMBER FINRA/SIPC

        Entering Retirement? … What's Your                                   Well-off white collar workers will statistically live longer
               Investment Horizon?                                           than poorer blue collar workers. How you are able to
                                                                             control your living style and health clearly has an effect
Those entering retirement often misperceive the length                       on your life expectancy. So you are not destined to kick
of their investment horizon. Just how long does your                         the bucket at the 75-year mark!
portfolio need to last, you ask? Well, that all depends on
                                                                                   Second – and more amazing–is that the older you
how long you will probably live. But that‟s where the
                                                                             get, the further beyond your original life expectancy you
misconception is! How long will you statistically live?
                                                                             are expected to live! That‟s because you have survived
    We all know that life expectancy1 is somewhere                           early death statistics that restricted your original life
around 77. But what does that really mean?                                   expectancy based on your birth year.
     Life expectancy is based on a birth year. The life                           Insurance statisticians keep track of this extended
expectancy2 for people born in the year 1900–the turn of                     life expectancy for persons based on their current age.
the 20th century–was about 50. That means 50% of the                         The IRS publishes its own tables on these.4 It‟s called
people born in 1900 were expected to live beyond 50,                         „the life expectancy factor‟ which is the number of years
while 50% were expected to have died before reaching it.                     more you have to live–statistically. You have a 50%
So life expectancy is statistically the „50/50‟ age that                     chance of outliving these too! See the table for examples
people will live to.                                                         taken from the IRS‟s table.
     The life expectancy3 for a person born in the year                      Current age (yrs)            IRS Life               Projected life
2000-the turn of the 21st century–is 77. So 50% of these                                                  expectancy             expectancy (yrs)
people will live beyond the year 2077. We can see that                                                    Factor (yrs)
life expectancy has increased by about 50% during the                             60                          25.2                     85.2
20th century. Improved medical care and health account
                                                                                  65                            21                     86
for most of this.
                                                                                  70                            17                     87
    Now here’s the rub.
                                                                                  75                            13.4                   88.4
     First, these life expectancy values are an average of
everyone born in a certain year. Life expectancy has a                            80                            10.2                   90.2
finer grain variation based on a person‟s sex and
                                                                                  85                            7.6                    92.6
socioeconomic status. For people born in the year 2000,
women‟s life expectancy is 79.9 while men‟s is only 74.
                                                                                  All this comes down to the statistical fact that
      Centers for Disease Control and Prevention--information at             retirees have generally a much longer investment
      Ibid.                                                                       4
                                                                                      Single Life Expectancy Factor in IRS publication 590, Appendix C.

                           Dennis Williamson, CSA             123 Cherry Hill Drive, Belton, MO 64012           (816) 331-5711
                                                            J.P. Turner & Company, L.L.C.
horizon than they think. When you plan out–or re-               goals are interrelated, often through complicated tax,
evaluate--your retirement years, be sure to prepare your        social security rules, and financial strategies.
living style, portfolio, and withdrawal rates to keep your
                                                                     To see what you can actually achieve, you need to
portfolio robust so it will be there as long as you will–
                                                                talk openly to us about your ideas and wishes. Let us
                                                                know what activities you wish to engage in. Although
     Of course, each of us is different, and your health        playing golf and traveling may be part of them, give us a
situation may make a significant difference.                    „thought-out‟ list of things you want to do in retirement.
                                                                Tell us if you would like to work a bit–or if it is optional
    Give us a call or fill in the reply coupon so we can
                                                                and what benefit would be achieved if you did.
help position your portfolio for projections consistent
with your investment horizon.                                         Let us know what wishes you might want to make a
                                                                reality but think you can‟t. This can include working and
                                                                possibly living somewhere else.
  Help Us to Help You Achieve Your Goals
                                                                     Let us know if you would like to give to charity and
You may be able to achieve more of what you want for            leave something to your children. This is important since
retirement than you think. And we, as your financial            there are various ways to spend assets and yet secure your
advisor, often can help you see what implications your          legacy.
intended actions, decisions, and wishes for retirement
may have on your investment approach. But we cannot             As a rule of thumb, you should remember communication
help you unless we know what wishes are ultimately on           is the most important aspect of retirement and estate
your mind.                                                      planning. Always communicate your full wishes to us -
     Retirement planning--in the most general sense--           even the ones you may think are not important. You may
seeks to optimize both a retirement income consistent           be surprised at what we can help you achieve.
with what makes you happy, and your legacy.                          Give us a call or fill out the reply coupon. Plan to
     Your required retirement income depends on the             talk over all your ideas and wishes for retirement with
amount of assets you have, how you intend to use and            us so we can help optimize what you can achieve.
draw upon them, where you will live, and if you intend to
work during part of your retirement–and in what way.
How these questions are answered can have significant                   These articles are not intended to provide tax or legal advice
impact on optimizing what you actually need and can do            and should not be relied upon for such. They are summaries of our
                                                                   understanding and interpretation of some of the current laws and
with what you have.                                                regulations and are not exhaustive. Investors should consult their
                                                                    legal or tax advisor for advice and information concerning their
     Your legacy may include a donation to charity and                                  particular circumstances.
bequests to your children and others. How you make
charitable donations and bequeath to others can be
achieved in a variety of ways through various financial
planning approaches.                                               May’s Hot Topic Checklist:
     We can help you achieve goals in ways you are not
                                                                     I‟ll help you calculate if you should convert
aware of. For example, maybe you want to leave your
                                                                      from a regular IRA to a ROTH IRA.
home to charity but want to reside in it for life now. (You
get a tax deduction that you otherwise miss if you leave             I‟ll help you determine if you should
the home at death). That can be accomplished. That‟s                  “stretch” you IRA.
because we are aware of how factors supporting your

                      Dennis Williamson, CSA     123 Cherry Hill Drive, Belton, MO 64012        (816) 331-5711
                                               J.P. Turner & Company, L.L.C.
 Coupon: Check the boxes to receive FREE Information

Your Mailing Information:                            Mail this form back to:
Name __________________________                      Dennis G. Williamson, CSA
Street __________________________                    Certified Senior Advisor
City ___________State ___ Zip _____                  123 Cherry Hill Drive
Phone (     ) ______-____________                    Belton, MO 64012
E-Mail: ________________________                     E-Mail:

Please provide me with FREE information on these items mentioned in this or
previous month’s newsletter/s:
         How can I tell if my portfolio is structured to provide for as many years as I will be
         I have some financial concerns to which I would like to gain advice or clarity.
         I or a family member has shares of company stock in a retirement plan and want to
          reduce their taxes
         I am very interested in turning my assets into income

    Additionally, many seniors have been requesting advice on the following
topics. Just circle the area/s of interest and I’ll remember to discuss them in
greater detail should you desire a meeting on a specific topic:
       Long-Term Care Insurance, should I purchase coverage or self insure?
       Annuities, are annuities “right” for my situation? If so, which one/s?
       Equities, should I own stocks? If so, which one/s and how should they be allocated
        to match my risk and time horizon?
       State & Federal Income Taxes and Estate Taxes, are there ways to reduce or
        eliminate these taxes?
       IRA‟s, should I convert to a ROTH IRA or not; should I stretch our IRA‟s and how
        can I avoid costly distribution mistakes?
       CD‟s, do I have to buy from my local bank or are there other sources for FDIC
        insured CD‟s available to me?
       Rollovers, should I self-direct or not and what are my investment options?

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