Calculating your future
Do you know how much money it will take to fund your retirement? Like many Americans, you may have no idea. However, there are plenty of free online retirement calculators that can help you figure out how much you’ll need to set aside.
An easy-to-use calculator can be found at www.moneycentral.msn.com/retire/planner.aspx, and the Employee Benefit Research Institute offers several calculators at its site, www.choosetosave.org/calculators/#retirement. For a projection of your Social
Security retirement earnings, visit www.ssa.gov/estimator. (Keep in mind that these Web-based tools use different financial assumptions, so you may get varying results from each calculator.)
Security retirement earnings, visit www.ssa.gov/estimator. (Keep in mind that these Web-based tools use different financial assumptions, so you may get varying results from each calculator.)
When inputting data, experts offer the following tips:
Don’t underestimate your life expectancy
Don’t overestimate your investment performance
Plan on retiring with 80 to 90 percent of your preretirement income
Revisit the calculator periodically to take into account changes in your financial situation, inflation and your investment returns
Robert Sberna
Q: I’m saving for retirement. Do you have any advice for me?
A: The average life expectancy of Americans is now about 78 years of age, and a significant number of us are expected to live into our 90s. Unfortunately, many people don’t factor that projected longevity into their retirement planning.
“People retire at 65, but they don’t realize how long their retirement is going to last,” says Jeff Pikus, a financial services professional in Parma Heights. “If you don’t plan for a long retirement, you can end up outliving your savings.”
Pikus says most people are focused on the accumulation phase of retirement planning. “But they also need to focus on the preservation of their retirement nest egg. Once you’re retired, you can’t really
afford to keep all your money in investment vehicles that are generating only 2 or 3 percent a year because inflation will erode your savings. To protect your savings, you need to have a percentage of your funds in the stock market, or other investments that can act as a hedge against inflation.”
Jeff Pikus, CLU, ChFC, is a district manager for Farmers Insurance. He is immediate past president of the Society of Financial Service Professionals, Cleveland Chapter.
Sage advice
Retirement planning can be perplexing. Tax laws and financial products are constantly changing, so it makes sense to seek the help of a professional. But how do you find a good financial adviser?
The first step is to ask for referrals from friends and business colleagues. You’ll want to make sure that advisers and their firms are properly registered with FINRA (Financial Industry Regulatory Authority), the SEC (U.S. Securities and Exchange Commission), or a state insurance or securities regulator. If they are registered with FINRA, you can check out their background and disciplinary history at www.finra.org.
It’s a good idea to select an individual who holds some type of professional accreditation, such as CFP (Certified Financial Planner) or ChFC (Chartered Financial Consultant).
When you’re interviewing prospective advisers, here are a few questions to ask:
How many years of experience do you have?
What are your licenses and credentials?
What is your investment philosophy?
Do you work on a fee-based, hourly rate or commission system?
