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Executive Summary
Average Life Expectancies Through the Ages
Housing Away From Home
The Rule of 720 10 20 30 40 50Housing Transportation Food & Beverages Medical Care Recreation Education & Communication Apparel Other Goods & Services Consumer Price Indexes for the Elderly, March 2012Percent of total expenditures
No matter how strong or how long a bull marketruns, one substantial correction can have aresounding effect on retirement assets. Moreimportantly, however, it isn’t whether your assetswill be affected by a market downturn, but ratherwhen. The “sequence of returns” in your portfoliorefers to the order in which your investment returnsoccur. If your portfolio experiences a downturn whileyou are still accumulating assets, there may be timefor it to recover any losses. While you may plan toretire at a certain age, you can’t plan on how themarket will be performing at that time. If yourinvestments experience a decline when you’reready to begin taking income from them, it couldaffect how much income you can withdraw over therest of your life.One of the things you should consider is that aretirement income strategy that relies onwithdrawals from a combination of interest earnings,dividends and/or portfolio holdings may helpmitigate the impact of market volatility on yourretirement income.Traditionally, as pre-retirees approached retirementthey would transition assets from growth-seekinginvestments to more conservative fixed-incomevehicles. This may have worked fine back whenretirement wasn’t expected to last as long.However, given today’s longer lifespans, you mayneed to pair higher-risk investments with sources ofreliable income. Reliable income sources mayinclude Social Security, pension benefits,government bonds and insurance products, such aslife insurance and annuities. Retirees may need toutilize a variety of financial vehicles, such asinvestments, annuities and traditional savingsvehicles, to meet the challenges of a longer life andthe potential impacts of inflation.Combine Growth Opportunity WithReliable Income SourcesSequence of ReturnsHypothetical Social SecurityBenefits Based onRetirement Age
For a divorced spouse to receivebenefits based on the ex’s workhistory, the couple must have beenmarried for 10 years or longer andboth must be age 62 or older. Thedeath of a spouse increases thesurvivor’s benefit. If a formerspouse is eligible for a benefit buthas not yet applied for it, the exmay still apply for the spousalbenefit as long as they have beendivorced for at least two years.Widows and widowers are entitledto the higher earner’s full retirementbenefit once they have reached fullretirement age, but they canreceive reduced benefits as earlyas age 60. Once a divorced spouseremarries, he or she is no longereligible to receive a benefit basedon the first spouse’s work history —unless the subsequent marriageends in death, divorce orannulment. A surviving spouse mayclaim a reduced benefit on oneworking record and then switch totheother.A qualified divorced spouse mayreceive the same benefit as thecurrent spouse. The currentspousal benefit is not reduced as aresult of this.Spousal BenefitsDivorce Facts
Social SecurityAnnuities:
Insurance
AnnuityIRA
Annuity With a Guaranteed Lifetime Withdrawal BenefitFixed Index AnnuityLife Insurance
Long-term care insurance(LTCI) may offer flexibilityand can be a viablechoice for baby boomersstill enjoying good healthand relative wealth. LTCIis designed to helppeople pay for short- orlong-term care andhousing costs at anassisted living facility,nursing home or even inyour own home — oftenthe preference of seniors.Typically, purchasing apolicy while you areyounger may allow you topay lower premium rates,but even at a later age, itmay still be worthconsidering purchasingan LTCI policy for thebenefits it can provide.LTCI policies are subjectto restrictions, limitationsand medical underwriting.Long-Term CareInsuranceInvestmentsMunicipal BondsLaddered BondsDividend-Paying Stocks
Additional questions toconsider:Conclusion|Ready to feel confident about the days ahead?
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