01 November 2011

I'll mention the obvious, and you probably hear it every year at open enrollment meetings: Participate in your company's 401(k) plan and make sure you take full advantage of any company match. The match is free money―take it. If your company doesn't have a plan, contribute to a qualified retirement account and participate in other forms of investing. Remember, the sooner you begin, the less you have to save.

If you live long enough, you will hit retirement age! Here are a few basic steps to help you get there:

• Create an overall plan, consider every aspect of your life (e.g., recreation, lifestyle, entertainment, and income) and be flexible.
  • This plan would include your estimated retirement age.
  • Calculate expected Social Security and pension income. Social Security has an accurate calculator online at www.ssa.gov.
  • Estimate how much income you believe you will need in retirement.
  • Estimate how much of a nest egg you will need once retirement begins. This number will fluctuate like an electrocardiogram in the beginning of your savings journey and will deviate less as your nest egg builds and you come closer to retirement.
  • Review your plan every year to make sure you are on track and make prudent adjustments where warranted. Consider conducting the review when you complete your taxes for the year so the review is done around the same time every year.
  • If your company retirement plan offers fiduciary investment advice, consider taking it. Your advisor may have tools to help you along the way.

• Decide on an appropriate asset allocation that makes sense for you and your feelings about risk. Base this on your expected return and your years until retirement .
  • Stick with it. Really, don't make emotional changes.
  • If your feelings about risk make your sick, take less risk, but you may need to save more to reach your goals established in the first step above.
  • This one is a no brainer―look at the mutual fund expense ratios of your portfolio. Saving 0.5% to 1% a year in costs over the course of your working career can boost the size of your retirement fund a whopping 10% to 20%.

• Practice being retired while you are still working.
  • Try it out. See if you can live within the income parameters you set at the beginning of the journey and modified over time. Now is the time to find out if your plan is viable, not two months into retirement.
  • Be prepared to be flexible. Working another year or two may be the answer to a secure retirement.

All the tools to assist you with building your plan are on the Smart Investor Wealth Management System. If you would like access to the program, give our office a call at 916-435-2100 and ask to speak with Cathy Keck or Tracy Gunter.

Additionally, Smart Investor has significantly enhanced the fiduciary services we provide to our retirement plan clients and was recently hired as a fiduciary investment manager for a national multiple employer retirement plan. We can provide your company with a Second Opinion Review of its retirement plan; who knows―you might be able to receive the same high level investment services at work as you do with your personal investments. Just give us a call to arrange an introduction with your plan sponsor.