Planning for Retirement

Get the most mileage from your retirement savings

The road to retirement can seem long, winding and filled with roadblocks. You know you have to put money away each month, but may find yourself spending your money on college tuition, a new car or a family vacation. Hilliard Lyons can help you create a plan to prioritize your long-term goals and develop an investment strategy structured to achieve them.

Think about the plans you would like to make. Would you like to travel to an exotic destination, or pack up an RV and head across the country? Maybe you would like to take one day at a time, or simply kick back and delve into your book group’s latest selection.

Today, the average retiree, age 65 and older, gets a large portion of their retirement income, close to 40%, from Social Security. However, the bulk of a retiree’s income typically comes from earnings, pensions and asset income.* And for wealthier retirees, the percent contributed by Social Security is less – much less.

Getting ready for retirement

Take steps to make sure that when it is finally time to bid farewell to the workforce, your savings will support your retirement dreams and last your lifetime – regardless of whether retirement was your decision, your spouse’s decision or your employer’s decision.

However and whenever you retire, you need to make sure you are financially secure. Since people are living longer, the average 65 year old should plan to have retirement savings which can last 20 years or longer.** As you get older, you are likely to face rising and significant health care expenses.

In addition, your retirement savings need to keep up with inflation. Invest too conservatively and the return on your money may be lower than the rate of inflation. This would mean that the purchasing power of your money would decline.

You also need to think about how much you can comfortably withdraw from your nest egg each month. As you deplete your nest egg, you lower your potential for returns. If you have $1,000,000 in savings, and you earn an average annual return equal to 5%, you would earn $50,000. If you have half that amount, or $500,000, your 5% return would generate half the income, or $25,000 for the year. Keeping your withdrawals to a minimum preserves your investment base and increases the potential income you can generate.

Your Hilliard Lyons Financial Consultant can help you create an asset allocation strategy designed to keep up with inflation, create income and keep in line with your risk level. He or she will help you structure your retirement income, recommending accounts to draw from and advising you on how much you can comfortably withdraw.

* “Income of the Aged Chartbook, 2004,” Shares of aggregate income, by source, 2004, Social Security Administration Office of Policy, September 2006.

** National Center for Health Statistics, United States Life Tables, 2003.