Friday, April 30, 2010

Weigh Your Retirement Options and Plans

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

One casualty of the recent bear markets has been many people's faith in their ability to retire. Retirement plans based on what once seemed a reasonable 10% annual rate of appreciation have instead seen 10 years of minimal, if any, real appreciation in their equity investments. The question now is what should you do with respect to planning for retirement?

The first step is simply to spend less and save as much as you can.

If the market experiences an average return of 5.5% (which looks quite rosy at this point), building a nest egg of $1 million will take either hefty investments now, or a longer period until retirement. Each year you delay saving, the more you will need to set aside.

Source: Investopedia

Remember that risk is very real when you invest your savings.

Before working with a financial adviser or money manager, ask what they will do to protect your savings in the event of another market downturn, because there will be one. If they don't have a plan that you can buy into, don't invest.

Consider alternative retirement goals.
Work longer, which will increase your Social Security payments and give your retirement investments more time to grow. IRS regulations allow participants in a 401(k) and other workplace retirement plans to delay their required minimum distributions well beyond 70.5 as long as they continue to work

Phase in your retirement.
Gradually reduce your work hours until you can afford to fully retire.
Plan to work part-time in retirement. But be careful because this will impact the amount you receive from Social Security if you opt for early retirement.

Hit reset on your lifestyle.
A smaller house, renting a vacation home instead of owning, cutting back on club memberships... these are all ways to free up funds that you can use for retirement. Look for ways to minimize monthly expenses such as property maintenance, loan payments etc. Even when expenses seem small individually, added together they become real money. If you are assisting younger members of your family with their expenses, this may be the time to cut the strings.

Retirement is not beyond your reach. In fact, it may be much more feasible than you think. The important thing is to not wait until the last minute to start planning. The earlier you put a plan in place the greater your chances of succeeding. For help with achieving your retirement goals, let's talk.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Heritage Capital LLC


  1. I really like what you said about renting a retirement house instead of owning one. The sole responsibility of the retiree in renting a retirement house is the regular payment of the rent. On the other hand, owning a retirement house includes the payment of maintenance repairs, improvements, club membership payments, property taxes, and others. I am glad to know that most seniors in Charlotte, North Carolina are aware of the benefits in renting in a Charlotte retirement homes community or in a Charlotte senior living area. They are so excited upon learning of the advantages of doing so. Thanks!

  2. These are some excellent tips for preparing for retirement. With an increase in retiring baby boomers and less than desirable economic circumstances, the industry is changing drastically, and retirees are prone to confusion and even fear. The strong variety in North Carolina retirement communities makes the state a desirable retirement destination for retirees with any extent of resources.