Financial News You Can Use

T H E R ETIR EME N T W IT HD RAWAL R ATE DIL E MMA: WITHDRAW TOO MUCH and face outliving your retirement savings

or

WITHDRAW TOO LITTLE and under-live your potential for an enjoyable retirement

Richard L. Truxall Investment Specialist 10511 Citation Dr., Suite 300 Brighton, MI 48116 Ph. 810-229-0731 Web: www.truxall.com

Financial News You Can Use September 2013

Richard L. Truxall Investment Specialist INVEST Financial Corporation 10511 Citation Dr., Suite 300 Brighton, MI 48116 Ph. 810-229-0731 www.truxall.com www.facebook.com/RichardTruxall

FINANCIAL NEWS YOU CAN USE

Preserving Your Nest Egg in Retirement When you enter your retirement, the assets that you have taken so many years to save will become one of your main sources of income.

help keep their money more liquid and avoid stock market volatility. However, this strategy can also limit the opportunity for retirees to grow assets and stay ahead of the inflation rate during their retirement years.

Do you know how much money you can safely spend each year without running the risk of outliving your savings? As a rule of thumb, experts have suggested a 4% annual withdrawal rate for a typical retiree.1 If you exceed this rate, you could be at risk of spending down your savings so that you won’t have enough to last through retirement. To help preserve your nest egg, you should have a plan in place to avert risks with potential to erode the value of your retirement savings. Overspending The amount you draw to spend from your retirement account each year will greatly impact how long your money lasts through retirement. Withdrawing at even a slightly higher rate can significantly decrease the amount of time you can draw from your retirement income. To illustrate, a $1-million portfolio with a 4% annual withdrawal rate could provide five years more retirement income than a 5% annual withdrawal rate.

Inflation

or credit card debt with variable rates that could increase over time. The more interest you accrue on debt, the less money you have to spend in retirement. Here’s a rather sobering statistic: Around 30 percent of the senior population is relying on plastic to cover basic living expenses, according to Demos, a public policy organization.2 Longer Life Spans Of course you can’t know for sure how long you’re going to live, but it is possible that you will spend more years in retirement than you spent working. For this reason, it’s important to plan for a longer retirement rather than a shorter one, just to be on the safe side. Market Risk

Carrying Too Much Debt Carrying too much debt can tax your resources, especially if you have loans

When it comes to investing their retirement savings, many retirees take a conservative approach, moving a majority of their assets into bonds and CDs to

Even the smallest inflation rate can have a big impact on purchasing power. For example, a retiree with $72,000 of living expenses in 2012 would discover that it takes more than $150,000 - almost twice as much - to meet expenses 25 years later.3 It is also important to keep in mind that some costs may rise even faster than the general rate of inflation. Cost of Health Care According to the most recent estimate released by Fidelity Investments, retirees need to plan for $240,000 to cover their out-of pocket medical costs during retirement.4 That’s how much a typical retired couple will spend on prescriptions, deductibles and Medicare premiums. Increases have averaged more than 5% a year since Fidelity began estimating costs in 2002. Can I be of assistance? Let’s discuss strategies to help make your money last through your retirement and determine an appropriate withdrawal rate based on your situation.

Sources: 1) Based on studies conducted by Harvard University in 1997; Trinity University in 1998; and RetireEarly.com in 2000. 2) Tami Luhby, “Senior Citizens Struggle with Mounting Debt,” CNN Money, 0D\ %DVHGRQDYHUDJHDQQXDOLQÀDWLRQUDWHRI%XUHDXRI/DERU6WDWLVWLFV ³5HWLUHHV)DFH(VWLPDWHGLQ0HGLFDO&RVWV´)LGHOLW\9LHZSRLQWV0D\ Past performance does not guarantee future results. This information is general in nature and should not be construed as tax or legal advice. INVEST Financial Corporation does not provide tax or legal advice. Please consult your tax and/or legal adviser for guidance on your particular situation. The information in this report has been obtained from sources considered to be reliable but we do not guarantee that the forgoing material is accurate or complete. This article is not an offer to sell or a solicitation of an offer to buy any security, and may not be reproduced or made available to other persons without the express consent of INVEST Financial Corporation. Registered Representative of INVEST Financial CorporationPHPEHU),15$6,3&,19(67DQGLWVDI¿OLDWHGLQVXUDQFHDJHQFLHVRIIHUVHFXULWLHVDGYLVRU\VHUYLFHVDQG certain insurance products. Products offered are: 1RW)',&RU1&8$LQVXUHG1RW%DQNRU&UHGLW8QLRQ*XDUDQWHHG0D\ORVHYDOXHLQFOXGLQJORVVRISULQFLSDO 0915-109194