I Haven't Saved for Retirement Now What?

Retirees and pre-retirees must learn to adapt their savings and withdrawal strategies to a changing lifestyle and financial environment. If retirement is approaching or you’re already retired, you'll need to consider your age, life expectancy, living expenses and rate of return on your investments when making your long-term financial plan.

Assuming your retirement savings are worth $1 million, a typical withdraw rate would be 4% or $40,000, the first year. Assuming an annual inflation rate of 3%, multiply that amount by .03%, would yield a withdrawal amount of $41,200 the second year, $42,436 the third year, and so on. But life does not often work in a neat, mathematical formula. There may be market crashes or unexpected health expenses to meet. Therefore, each of us needs an emergency fund. You should also pay close attention to any tax-advantaged accounts you may have, such as IRAs and 401(k) plans.

Today there are many so-called “guaranteed-income products,” most of which have been designed to help protect retirees from running out of retirement income regardless of market conditions or increased longevity. Insurance can help families manage the risks of not living as long as expected, while various retirement-income products can help manage the risk of outliving your retirement savings.

Since retirement can now last 20-30 years, planning today can help you tomorrow. You may be concerned about:

• Outliving your assets
  
  
• Stock market volatility
  
  
• Our Social Security system
  
  
• How to best manage your money.

As people’s financial lives have become increasingly complex, insurance has evolved to meet many of these new challenges. Term and disability insurance can play key income-replacement roles while cash-value insurance and annuities are widely used to help fund retirement. Today dual-income households, business partners and people who depend on others use insurance to help secure their long-term personal and financial interests.

Long-term care insurance is proving to hold the answers to these questions. Designed to help pay for either institutional or in-home care, long-term care insurance goes into effect when a person can no longer manage such daily functions as bathing, eating or dressing. Depending on your state and required care level, institutional care can cost $20,000 -- $80,000 per year. Government assistance is generally available only after one’s assets are exhausted. The Center for Disease Control projects that over one million people will live to 100 during this century but only 15% of them will be able to live independently.

Whichever path you choose, keep in mind that to maintain your lifestyle, you will probably need to maintain 70-80 percent of your current income level. While everyone’s needs and financial goals are different each of us probably could benefit from a lengthy discussion.

• Consider your health status
  
  
• Understand your Social Security payments
  
  
• Consider tax-advantaged investments
  
  
• Account for inflation
  
  
• Be sure you have adequate insurance
  
  
• Realize the true value of your assets
  
  
• Put an estate plan in place.