Denton County Living Well Magazine Winter 2015 | Page 19

Planning for
Retirement in Stages

W

hile summer vacations
and national holidays
typically provide a break
for everyone who would
be considered a member
of the working public, there is one
big break ahead that’s a priority on
most everyone’s calendar — retirement. And while it may be closer
for some than it is for others, everyone needs to make sure they
are financially prepared when the
time comes to take
a permanent leave
from the ranks of
the employed. Personal circumstances
make planning for
retirement different
for each individual,
but there are several
considerations that
apply if you break it
down by the amount
of time you have left
until you retire.
If you have at least
ten years to go until
you plan on retiring,
you still have the advantage of time on your side. One of
the most basic principles of investing
is putting your money into different investment vehicles and then leaving it
there so you can reap the benefits of
long-term returns. With more than ten
years to invest, you might be able to
afford to take on a little bit more risk
with your investments. While equities
– such as stocks – have an inherent
risk of losing money, they also have a
history of providing significant returns
over a long period of time. Just keep
in mind that past performance is no

guarantee of future results.
Probably the biggest advantage of
getting an early start is the benefit of
compounding earnings. Based on the
investments in your retirement portfolio, the money you put in has the potential to earn more money for you
– whether through interest payments,
dividends, or other means of growth.
In many cases, those earnings can be
reinvested into your portfolio, further

enhancing the total value of your savings and allowing your money the opportunity to “make money” for you.
If your retirement is less than ten years
away, then it’s time to start making
subtle adjustments to your investment
mix. Hopefully, at this point you’re not
just getting started, but rather taking a
look at how your investments are allocated and making sure they appropriately match your risk tolerance, your
investment objectives and your relatively short time horizon. Because you
have less time to work with, you still

Courtesy of Barlow
Capital Advisors

want to have some investments that offer growth, but you also want to begin
looking at preservation of principal
through fixed income alternatives such
as bonds, which may provide a little
more stability in your portfolio and
help reduce your overall risk.
Finally, at some point you’ll reach
that day that you once thought was
so far off. When you find yourself
officially in the position to retire,
you will have a
whole
different
outlook on those
funds you have
set aside for just
that purpose. Instead of making
contributions
to
your
retirement
funds to help them
grow, you’ll be
looking to maintain income from
those investments.
You’ll likely begin
taking
distributions from them to
pay for your dayto-day expenses.
A thorough review of your investments will help you clearly see just
how much you have saved, and how
you will have to plan your distributions so you don’t run short on funds
during your retirement.
Financial preparation for retirement is
something that is different for every individual. To make sure that you’re on
the right track, take the ti YH