Ways for Soon-to-be Retirees to Protect and Preserve
Their Assets
©Shane
Flait 2010
If you’re in
the 62 to 65 year old range, you’re getting ready to
retire. And you have a remaining life expectancy
that’s statistically about 20 years or more - still
a long way to go. Be sure to prepare to preserve
your assets for the long haul. Here are a few things
to work on.
You can take
steps to better protect and preserve your assets for
you and yours in three areas. These are:
·
Insurance,
·
Investments,
and
·
Retirement
Income
Stay insured
while you’re still vulnerable
Problems
associated with your house, health and future long
term care can put a significant portion of your
assets in jeopardy.
Even though
you may have paid off your mortgage, keep your home
insurance up-to-date in order to cover its current
replacement cost; it generally keeps rising in
value. If you don’t, then a fire that can rob you of
a large portion of your home’s value - especially
after so many years of rising house prices.
Because
Medicare doesn’t start until you reach 65, try to
maintain your health insurance in case you encounter
a serious health problem and hospital stay if you
retire early.
Long term
care is not covered by Medicare. Medicaid will cover
it but it’s a program only for the poor. To qualify
for Medicaid long term care, you must first spend
down your own assets to ‘impoverished’ levels only
below which you’ll qualify. And those assets you
give away to impoverish yourself must be out of your
possession for up to 5 years before applying. So,
consider buying long term care insurance now and
make plans for how you’ll dispose of your assets
well in advance if you intend on applying for
Medicaid.
Protect your
investments from inflation’s effect
During your
retirement assure that your investments are there to
contribute to your retirement income. That generally
means maintaining a conservative portfolio often
based on income-based investments. But such
investments don’t generally protect you very well
from inflation’s effect.
Because just
a 3.5% annual inflation rate will halve the value a
dollar’s purchasing power over 20 years, try to keep
about 25% of your portfolio in equity investments
that tend to preserve their value against inflation.
Protect your
retirement income from unnecessary tax losses
Retirement
income generally comes from Social Security
benefits, a company pension and investments. Because
Social Security income is tax free below a threshold
income, try to keep your income below that threshold
level.
Taxable
income includes your pension and money you pull out
of any government retirement plan, like a 401(k) or
IRA plan – not Roth plans, though. And you’re
obligated to make minimum required withdrawals from
them to when you reach 70½. So what should you do?
Plan to take only the minimum required distributions
from your government plan investments. Then take the
remainder of what you need from the others
investments to help minimize losses to taxation.
That’ll help keep your taxable income lower but
still keep your government retirement plan
investments growing tax-deferred.
Shane Flait is a writer and educator. Get more info
at
www.EasyRetirementKnowHow.com
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