Winter 2009 USAA Magazine - USAA.com

ask a usaa expertBy John TooheyGame PlanDon’t drop the ball on managingyour retirement money.No matter your age, the recession surely has youwondering how today’s money woes may affect your future.John Toohey, USAA vice president of Equity Investments,offers tips for keeping your retirement plan on track, whetheryou’re retiring in three years or 30-plus. He gives one piece ofadvice to everyone: Diversify and rebalance your portfolio.Near or Living in RetirementIf you haven’t left your job yet, examineyour expected retirement earningsfrom your workplace retirement plan,investments, Social Security and anyother sources. And you may want totest out living for six months on thatamount. Income too tight? Considerworking longer, downsizing expensesor tweaking your retirement portfolio.A financial advisor can suggest whetheryou’d benefit from a focus on incomeproducinginvestments like incomeannuities, corporate bonds, municipalbonds, fixed annuities or high qualitydividend-paying stocks.1–2 Decades From RetirementCheck your diversification and rebalanceyour portfolio. Annual review ofyour asset allocation can help enforcea buy low, sell high practice that maylower your risk and potentially improveinvestment returns. It’s important tohave a mix of stocks, bonds, cash andother investments designed for you,your financial objectives and your tolerancefor market swings. Talk to a USAAfinancial advisor to help make sureyour asset allocation is on track, as wellas evaluate whether your investmentmix is right for your time horizon. Andlook into catch-up contributions if you’re50 or older, so you can contribute moreto 401(k) and Roth IRA plans.2–3 Decades From RetirementFolks who are several decadesfrom retirement are often advised totake more risk with their retirementfunds. However, given the rise inWant to tapinto USAA’smoneymanagementexpertise?Call us at(800) 235-1898.unemployment, consider job security,too, before making long-term investmentdecisions. If you have job securityconcerns or volatile job income, itmay be a good idea to fatten up thecash stash before maxing out your taxdeferredaccounts.3 or More DecadesFrom RetirementInvest systematically with help froma financial advisor. The younger youare when you start, the less you’llultimately have to save during yourlifetime. Take advantage of the powerof tax-deferred compounding andmatching contributions offered throughemployer-provided retirement plans. nAsset allocation does not protect against a loss orguarantee that an investor’s goal will be met.Diversification is a technique to help reduce risk.There is no absolute guarantee that diversificationwill protect against a loss of income.Systematic investment plans do not assure a profit orprotect against loss in declining markets. Dollar costaveraging involves continuous investment in securitiesregardless of fluctuating price levels of suchsecurities. Investors should consider their financialability to continue purchases through periods of lowprice levels.Investing in securities products involves risk,including possible loss of principal.26usaa magazine Winter 2009 (800) 531-USAA (8722)