section 1 - The American College Online Learning Center

(3) Work part-time during retirement.(4) Consider deferring Social Security benefits to maximize benefits.(a) This is a critical source of income—for example, for 40% of olderwomen living alone Social Security is their only incomec. Critical housing decisions for middle-income clients include:(1) Can I afford to live in this house?(2) What is the best way to tap home equity?(a) Reverse mortgage(b) Downsizing(c) Renting out space2. Financial asset decisions for middle-income clients include:a. To what extent is it appropriate to annuitize?b. What is the proper withdrawal rate from a portfolio?c. What is the appropriate asset allocation of the retirement portfolio?(1) The asset allocation structure will be determined in part by the amount ofrequired and discretionary expenses the client has.(2) The greater the amount of discretionary expenses, the greater the amountof risk that can be taken in the asset allocation model.(3) The greater the amount of fixed expenses, the lower the amount of riskthat can be in the asset allocation model.3. Is it appropriate to fund long-term care needs with long-term care insurance (LTCI)?a. When should LTCI be purchased?b. Is LTCI appropriate for those with few financial assets?c. Is LTCI appropriate for the wealthy client?4. How do these various retirement decisions interrelate?a. Decisions must be part of a long-term planning process.b. For example, if home equity is tapped early in retirement, then no chance for areverse mortgage to pay for long-term care needs.c. For example, an annuity purchase reduces liquidity, making it more difficult to payfor long-term care expenses in later years.d. Planners and clients need to balance the trade-offs of these decisions.5. What irrevocable elections do I have to make under the employer’s employee benefitplans?a. Participants in a defined benefit plan make an irrevocable decision about the formof benefit payment (about ½ of retirees today still have defined benefit pensions).b. Some face an irrevocable decision about staying in the employer’s retiree medicalprogram.c. Even 401(k) plans may have a fixed window for deciding on the form ofwithdrawals.6. Should I get advice to make these decisions?a. One decision is whether to make decisions on your own or get professional advice.b. The well-to-do will get advice; it is the middle market where this gets tougher.c. For the middle market, just finding an affordable advisor will be tough.1.6