Circa 1999, I was developing a plan with an advisor out of Tucson.  His clients were a husband and wife team who were turning 55 and retiring from a major aviation company.  Collectively, they had accumulated $2 million in company stock, which would have more than funded their retirement.

Our proposal was to cash in most of the stock they accumulated and place it into more conservative insurance-based products that would have protected their principle against stock market losses, and generated the income they needed to enjoy a stress-free retirement.

Unfortunately, things were not that simple for this couple.  Both had been with this company for many years and the stock had been very good to them.  Additionally, this was at the height of the first tech bubble.  In their eyes, they would live on the dividends of the stock in retirement and watch the stock continue to split and double in value.

Our proposal was rejected.

Needless to say, timing was not on their side.  Within months, the markets suffered a major correction and they lost 50% of their value in less than a year.  I spoke to the advisor a few months later and he told me that his clients were both were forced back to work to try to regain the $1 million they had lost.  I can only hope they did not suffer the same fate in the corrections of 2008 and 2013.

The five years prior to and immediately after retirement will have the largest impact on the lifestyle you will enjoy in retirement.  In those years, time is no longer on your side and greed will devastate your plan. 

As retirement approaches, early to mid 50’s, start to evaluate your goals and the risks you may be taking.  Update the allocation of your portfolio, and consider the addition of insurance-based products to minimize the overall risk of the entire portfolio.

Watch this video and see how the changes in the market can effect your retirement.

Written by Marc Montini with Montini and Farrah Tax Advisory Group 
www.montinico.com

It started one morning at breakfast with my parents to celebrate my dad’s 67th birthday.  I looked across the table and I saw a very tired and unhappy man.  For those of you who know my dad, you will know how out of character this was of him.  I asked him, “Dad, what’s going on?”  He mumbled a few things about work and his boss, and I asked him a very important question. “Dad, why are you still working?”  Once again he mumbled a few things about needing to continue to work.

The fact was my dad did not know HOW to retire.  Why would he?  My dad was proud of the career he had and the things he accomplished.  He never thought about retirement and certainly had not established a plan for when that great day would come.

After breakfast, I went home with my parents and I opened up some software I use to assess the assets accumulated, the income needs my parents would have in retirement, and if there were any gaps that needed to be filled.

When I plugged in the data, low and behold the charts all came out green, meaning my dad could retire anytime he wanted to.  Realistically, he probably could have retired five years earlier had we established a realistic plan.  Once again, I turned to my dad and said, “Why are you still working?” 

A week later my dad announced his retirement. I’m happy to say retirement suits him very well.

The moral of the story is that retirement will catch many of us by surprise.  With some planning, we can ensure that your retirement is established on your terms.  Keep working if you want, do charity work, or travel the world.  This is what retirement is about…having the financial freedom to do anything you want and to do it on your terms.


Written by Marc Montini with Montini and Farrah Tax Advisory Group
www.montinico.com