Judith Ward, CFP at T. Rowe Price, Jonathan Murray, Senior Vice President of investments for UBS in Hunt Valley, Maryland, and Scott Butler, Financial Advisor at Northwestern Mutual, share their secrets to creating a sound investment strategy as you approach retirement.
In the last few years the financial markets and the economy have seen historical changes that have contributed to the way we plan for retirement. Baby Boomers have seen dramatic decreases in their savings while Gen Xers may start to rethink the way they invest their money for retirement.
Judith Ward, CFP® at T. Rowe Price says, “People that are approaching retirement should have a mix of stock and bond investments in order to reduce the short-term volatility swings that can occur when owning just stocks.” Jonathan Murray, senior vice president of investments and a wealth management specialist for UBS in Hunt Valley, Maryland adds, “Investors who are nearer retirement should be more conservatively positioned, and focused more on capital preservation than on growth and accumulation. What retirees should not do is attempt to quickly ‘make up the losses’ through aggressive approaches and tactics.”
Ward also advises that younger investors who may not have the luxury of reliable retirement income sources such as a pension or higher social security amounts build their savings goal into their budgets (approximately 15 percent of salary including any company matches). While Murray adds, “For younger investors, this may turn out to be the investment opportunity of a lifetime. Just be sure to spread your savings around, and include international asset classes and non-correlated securities.”
JudithWard
Judith Ward is a senior financial planner and Vice President of T. Rowe Price Investment Services and has been helping investors for over 20 years. Among her many responsibilities, including developing financial planning-related products and services as well as online tools and calculators, Ward provides guidance about a broad range of investment-related issues.
Strategies for Retirement Planning:
1.Think about how you plan to spend your time in retirement. Will you travel? Take care of grandchildren? Become a volunteer? Work part-time? These factors play a major role in how much income you will need in retirement.
2.Compare your current lifestyle to how you want to spend your retirement. This will help you determine how much you might need to save for retirement.
3.Reassess your portfolio once a year. Make sure you have an asset allocation that is appropriate for your age and your goals. We suggest that 40 to 60 percent of your assets be in equities.
TIP: Tax-Free Income: Ward suggests several ways to get tax-free income in retirement, such as the Maryland Tax-Free Bond Fund (MDXBX), the Tax-Free Income Fund (PRTAX), and an opportunity to convert to a Roth IRA in 2010 with no income limits. For a one-stop fund already diversified and allocated for you, consider one of the T. Rowe Price Retirement Funds.
To find out more information go to troweprice.com or call 800-638-5660.
ScottButler
Scott Butler is a financial advisor and leader of Northwestern Mutual’s offices in Columbia, Frederick, and Hagerstown since 1989. He is also a certified financial planner with 20 years of experience helping clients achieve financial security. He has helped clients become clear about their needs, goals, and financial objectives by facilitating action with solutions specifically tailored to them. It is Butler’s goal to help people align their portfolio with their risk tolerance, educate their children, retire with freedom, and leave a legacy they are proud of.
Strategies for Retirement Planning:
1. Asset protection. Accumulate sufficient assets for the retirement lifestyle desired in the most tax-efficient way possible.
2. Asset diversification. The asset diversification of every portfolio needs to be monitored to match a person’s risk tolerance and time frame.
3. Risk management. A great defense is sometimes the best offense. Make sure the correct amount of life insurance is in place to provide both protection and flexibility. It can help provide for a younger spouse, help provide an estate for children after a long, enjoyable retirement, and can provide options for gifting to trusts or charities.
TIP: Guaranteed income stream: Permanent life insurance provides living benefits. The cash value of a permanent life insurance policy grows income-tax-deferred. It can be used to provide an income stream during retirement or can help meet other long-term financial goals, such as funding a college education for a child or grandchild.
To find out more information or to contact Scott Butler go to scottbutler.nmfn.com or call 410-480-7070.
JonathanMurray
Jonathan Murray is a full-service advisor who has a team of retirement experts with a combined 60 years experience. He currently manages over $500 million of clients’ retirement assets and works closely with affluent families to help them achieve their financial goals. In addition to serving as a daily financial analyst on WBAL Radio in Baltimore, he appears regularly on WBAL TV, and is a contributor with his twin brother David on The Today Show and MSNBC, where they discuss current economic conditions, investment themes, and wealth management strategies. They recently authored the book, “Two For the Money: A Guide for Balancing Retirement, Kids, and Aging Parents.”
Strategies for Retirement Planning:
1. Adjust your view of retirement. Retirement isn’t just about the money, because we are living so much longer now. You can expect in some instances to spend as much time in retirement as you did in the workforce.
2. See retirement not as an end but as a beginning. This is your chance to leave a legacy. According to AARP 68 percent of older workers plan to work beyond retirement or never retire at all. You can take charge of this next exciting chapter of your life and make a difference.
3. Adjust your financial perspective. We spend most of our lives in the accumulation phase, but when you near retirement, you have to think about protecting and distributing your income.
TIP: Assets should keep up with inflation. Jonathan says there are investments that will help retirees hedge against inflation including Treasury Inflation Protected Securities (TIPS), and commodities such as gold, timber, and real estate.
To find out more information or to contact Jonathan Murray email him directly at themurraygroup@ubs.com or call 410-771-3270.
Jennifer K. Dansicker is Special Projects Editor for ChespeakeHome.
