A.C.T. Now Regarding Your Finances

March 9th, 2009 at 4:23 pm by under Your Money

If you have seen your retirement plan or personal investment account value drop 40% to 50% in the last 18 months you may be asking yourself … What Do I Do Now?

What you should do is A.C.T. …  Assess, Calculate & Take Action.

A – ASSESS your current situation.  Do an inventory of your assets and liabilities and revisit your goals and time horizon. The critical piece of information is your current and/or future monthly budget needs.  Review your monthly expenses and complete a side by side analysis of how each of your expenses will change when you enter retirement.  You also need to dust off those Social Security statements you receive and review your benefit amount at different ages.  If you have a defined benefit pension plan, you should contact your employer and have them calculate your pension benefit.  You should have them do this for you at the various possible ages you may want to begin benefits and at the various payout options provided within your plan.

C – CALCULATE your financial projections (mainly retirement).  There are a number of web-sites that you can use to calculate retirement projections.  You should be careful that you are inputting the proper information and using realistic assumptions within your calculations. You may want to consider inflation between 3-4% (4% if you want to be conservative).  Also, the rate of return you may want to consider while accumulating for retirement may be 7% to 8% and possibly 5% to 7% during your retirement years.  There are many web-based tools or even the over-the-phone investment company planning support services you may be able to access.  However, I would recommend working with a financial professional that has the knowledge and resources to help you over time and not just during the initial planning stage.  A financial professional can also help you accurately interpret the data generated.

T – TAKE ACTION. Once you have an updated analysis of where you stand, you should implement any changes your analysis suggests.  Changes that may relate to your desired retirement date, your spending or saving strategy, cash reserve needs or portfolio adjustments.  This is the difficult part. There is more to managing your situation than just changing investments or rebalancing your asset allocation.  You may find that you are on still on track and you don’t need to make any changes. You you may find that some adjustments are necessary and should be addressed immediately.
You may need to spend less, save more or change your portfolio to produce more income.  Whatever you discover in your recalculation you need to act on.  Don’t ignore it and simply hope for the best.

Remember, ASSESS your situation, CALCULATE the impact of recent events and TAKE
to address needed changes.

The time to A.C.T. is now.

Roger J. David
Rinvelt & David, LLC
Securities and Advisory Services offered through Mutual Service Corporation. Mutual
Service Corporation and LPL Financial are affiliated companies and are members of
FINRA/SIPC.  Rinvelt & David, LLC is not affiliated with Mutual Service Corporation or LPL Financial.

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