FINANCE
Common weak spots in retirement planning
Many households think they are planning care-
fully for retirement. But in many cases, they are not.
Weak spots in their retirement planning and saving
may go unnoticed.
Couples should recognize that they may face ma-
jor medical expenses. Each year, Fidelity Investments
estimates how much a pair of newly retired 65-year-
olds will spend on healthcare throughout the rest of
BRUCE
their lives. Fidelity says that on average, retiring men
LINGER will need $133,000 to fund healthcare in retirement;
retiring women need $147,000. Even baby boomers in
outstanding health should accept the possibility that serious health
conditions could increase their out-of-pocket hospital, prescrip-
tion drug and eldercare costs.
Retirement savers will want to diversify their invested assets.
An analysis from StreetAuthority, a financial research and publish-
ing company, demonstrates how dramatic the shift has been for
some investors. A hypothetical portfolio split evenly between eq-
uities and fixed-income investments at the end of February 2009
would have been weighted 74/26 in favor of equities exactly nine
years later. If a bear market arrives, that lack of diversification
could spell trouble. Another weak spot: some investors just fall in
love with two or three companies. If they only buy shares in those
companies, their retirement prospects will become tied up with the
future of those firms, which could lead to problems.
The usefulness of dollar-cost averaging. Recurring, automatic
monthly contributions to retirement accounts allow a pre-retiree to
save consistently for them. Contrast that with pre-retirees who nev-
er arrange monthly salary deferrals into their retirement accounts;
they hunt for investment money each month, and it becomes an
item on their to-do list. Who knows whether it will be crossed off
regularly or not?
Big debts can put a drag on a retirement saving strategy. Some
financial professionals urge their clients to retire debt-free or with
as little debt as possible; others think carrying a mortgage in retire-
ment can work out. This difference of opinion aside, the less debt
that a pre-retiree has, the more cash he or she can free up for invest-
ment or put into savings.
The biggest weakness is not having a plan at all. How many
households save for retirement with a number in mind — the dol-
lar figure their retirement fund needs to meet? How many approach
their retirements with an idea of the income they will require? A
conversation with a financial professional may help to clear up any
ambiguities — and lead to a strategy that puts a new focus on re-
tirement planning.
Bruce Linger, CFP®, CRPC®, CCFS™, is a registered representative
and investment advisor representative of Lincoln Financial Advisors
Corp., a broker-dealer (member SIPC) and registered investment ad-
visor, 61 S. Paramus Road, Suite 425, Paramus, NJ 07652, 201-556-
4564, offering insurance through Lincoln affiliates and other fine
companies. This information should not be construed as legal or tax
advice. You may want to consult a tax advisor regarding this infor-
mation as it relates to your personal circumstances. The content of
this material was provided to you by Lincoln Financial Advisors for
its representatives and their clients.
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NEW JERSEY COPS
■ FEBRUARY 2019