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Jim Lentini: Your saving and retirement plans

Posted: December 14, 2009 9:21 p.m.
Updated: December 15, 2009 4:55 a.m.
Most everyone today has experienced losses with our retirement, savings and 401(k) plans due to this last depression.

Even Warren Buffet lost $25 billion in the Great Recession of 2008. What we have survived is one of the most harrowing periods in the history of modern finance.

And should the current deficit spending and legislation on health care become law, we will need more savings to pay for our increased cost of health insurance and tax increases.

If you are an employee, your 401(k) plan is still one of the best tools you have to get your retirement back on track with tax-deferred growth and a company match.

And, given time, with diverse balanced investments, you should replenish and build a meaningful lifetime income stream at retirement.

Some key points to accomplish these goals are:

n Save more - It may be tough to do, but when you have experienced such a hit on retirement savings, good recovery advice is to be disciplined and to save more.

Dave Ramsey, author of "The Total Money Makeover," was quoted as saying: "It's time to become an obsessive saver."

n Rebalance portfolios - With retirement accounts in equities experiencing the most downturn in 2008, you need to rebalance your allocation to adhere to your risk tolerance.

n Be opportunistic - There is an upside to the recession. A lot of things you need in coming years are inexpensive right now, like cars, houses and fixed-rate mortgages.

Take advantage of these good buys now to save money in the future, and be able to increase your savings for retirement.

If you are between the ages of 50 to 65, take advantage of the catch-up provision that lets you stash extra monies into your pension plans.

n Work longer - Working longer allows you to save longer and delay the date of withdrawals. It also reduces the number of years that your assets will have to generate income in retirement - a powerful combination.

If you can postpone collecting Social Security, you will become entitled to a higher monthly benefit.

A typical 62-year-old would boost annual retirement income 22 percent if he or she worked three more years, and 39 percent if he or she worked five more years.

Last, but not least, it is recommended to have some portion of retirement assets in portfolios that guarantee principal, guarantee growth and guarantee lifetime income for both you and your spouse.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments, Inc. His column reflects his own views and not necessarily those of The Signal.


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