parkland_february_2014_web_yp

[ FINANCIAL AFFAIRS ]
By David Volz
RETIREMENT PLANNING
ESSENTIAL FOR THE FUTURE
Retirement is coming. And, for those who are approaching
middle age, it is fast approaching. Working people need to plan
for retirement. They need to establish a disciplined savings plan
and make sound investments during their working years.
Years ago, most people would retire around age 65 and live into
their seventies. Now, people retire in their early 60s and may
live into their nineties. People need to plan for a much longer
retirement, perhaps even as long as they worked. A retirement
that can last for around 30 years may require a person to have
saved $1 million or more.
Usually, when people leave the workforce, they are no longer supporting
children and may choose a smaller home. They may want
to travel and pursue hobbies, but their overall expenses will decline.
“Younger people need to plan for retirement and start saving
early,” said Peter Weitz, a Senior Vice President of Investments
for Fusion Analytics Investment Partners in Coral Springs.
He offers one easy way to save -- give up Starbucks coffee. Or
if you have another indulgence, like candy bars from the office
vending machine, try to quit the sugar habit.
Arthur B. Barzilay, Managing Director - Wealth Management and
Wealth Management Advisor at Merrill Lynch in Coral Springs,
said, “With advances in technology and medicine, Americans are
living longer. According to the Social Security web site, the average
life expectancy for a man turning 65 today is 83, and for a woman,
it is 85. This is an optimal time to meet with a financial advisor
who can assist in building a diversified portfolio designed to help
provide for long-term growth, while keeping pace with inflation.
Do not forget to budget for increasing health care costs.”
It is very important for younger people to invest aggressively
and be willing to accept the risks associated with the stock market.
Weitz said, “A younger person has time. And, while you can
lose money in the stock market, over time, people who invest in
the stock market will do well. It is important to have a diverse
stock portfolio.”
Those who work for companies with 401K plans should invest
as much as possible in them. This will pay off in the end. People
should prepare for major expenses or setbacks in life. Those who
have children will have to factor in paying for college, while
also planning for retirement. They should buy a Florida Prepaid
College Plan.
People in their 40s and 50s should be investing systematically
and saving for their retirement. “This is like paying yourself,”
said Weitz. “When receiving your paycheck, put some aside in
your savings account.”
One problem Weitz sees is that people are afraid to lose money:
“There is a strong aversion to loss. People are still reeling from
the 2008 recession and they talk about how bad the economy
is. The stock market has recovered more than 100 percent, but
people are scared and want to hold onto their money.”
The earlier a person or married couple can begin saving for retirement,
the better, according to Cecelia Darden, a Certified Financial
Planner and chartered retirement planning counselor in
Coral Springs. She operates an Ameriprise Financial franchise.
Darden said, “People should have a diversified portfolio with a
number of different investments. An individual should know
their risk tolerance. People who work for companies with
a 401K plan should participate. This is one of the best ways
people can accumulate money for retirement income, so when
they quit, they will have money for the rest of their lives. Some
employers match a percentage of employee contributions.”
Younger to middle-aged people should make a strong commitment
to saving for retirement. They should have an arrangement
with money taken out of their checking account
every 30 days and put into a retirement savings account, such
as a Roth IRA. “People really need to save for their retirement
and have a separate retirement account,” said Darden.
“This account should not be co-mingled with other financial
assets that are earmarked for other financial goals, like a new
house.”
Retirement will be an important period of one’s life. A person should
plan carefully for it and follow a disciplined financial plan.
1 JANUARY 2014