Markets may have rebounded in 2009, but individual investors are still edgy and shell-shocked.

Even as the broad Standard & Poor’s 500-stock index remained up 56% since March, the U.S. unemployment rate crept above 10%, according to a Labor Dept. report released Nov. 6. “I don’t think many people are feeling very relieved,” says Milo Benningfield of Benningfield Financial Advisors in San Francisco. Many people believe the “[stock market rally] can’t last,” he says.

These remain risky times, and the last few years have demonstrated to investors the high cost of doing the wrong thing. Against that nervous backdrop, BusinessWeek asked financial advisers what common mistakes investors are making, and how to avoid them:

1. Don’t Jump In All at Once
A little optimism can be a dangerous thing. Individual investors are notorious for selling stocks when markets have already dropped and buying after they have risen. And, says Susan Elser of Elser Financial Planning in Indianapolis, “Selling low and buying high is the worst thing you can do for your returns.”

Among those who stayed away from stocks and other risky investments for the past year, many are irked to have missed out on the recent rally. But is now the right time to buy again?

Don’t rush back into the market because you worry you’ve missed the rally. “The biggest mistake is [to try] to make everything up at once,” says Micah Porter, president of the Minerva Planning Group in Atlanta.

At these levels, a 10%, 15%, or 20% correction in the stock market is entirely possible at almost any time. So, instead of buying all at once, Porter advises buying stocks gradually over the next year—or, if you have a lot to invest, an even longer time frame. That puts you in the market long-term, but minimizes the chances you’ll buy at the market’s exact peak.

2. Don’t Fall for Fads or Hype
In investing, jumping on the bandwagon is often a bad idea.

For example, television ads have appeared touting gold as an investment after the precious metal’s price has jumped higher, approaching $1,100 per ounce on Nov. 6.

Yet this could be the very time when gold prices are at or near their peak. “This is probably the worst time in my opinion to pile into gold,” Benningfield says. He also warns against currency speculation, another recent fad. “It’s really risky,” he says.

Along with other commodities, gold can be a valuable part of investment portfolios. But advisers like Steve Medland of TABR Capital Management in Orange, Calif., suggest keeping gold to less than 5% of your holdings.

Lots of marketing dollars are also pushing equity-indexed annuities these days. “It is the hot product of the day,” Elser says. But Elser, Medland, and others warn about the complexity and high fees of these annuities.

3. Don’t Use Headlines or Politics as Investing Guides
“Making [an investing] decision based on who is in political office, whether you agree or disagree, is a huge mistake,” says Elaine Scoggins, client experience director at Merriman, a Seattle-based investment advisory firm.

Since the election of Barack Obama as President, political temperatures on the right have risen (just as tempers rose among liberals during the last Administration). And that could be leading to bad investing decisions.

Based on their political beliefs, people are buying into disaster scenarios, from high inflation to a crash for the U.S. dollar to skyrocketing tax rates, Scoggins says. “There are a lot of scare tactics in the media and in politics.”

Betting your portfolio on these unlikely outcomes can be a big mistake.

“There’s incredible fear out there,” says Paul Sutherland, chief investment officer at FIM Group in Traverse City, Mich. But not all the fear is warranted. For example, he notes, a weaker dollar actually can help U.S. manufacturing or U.S. firms with overseas profits.

Politics and current events tend to spark emotions, which are a poor guide for long-term investing, Medland says. “What’s going on in the headlines doesn’t predict what is happening in the markets,” he says.

However, one political fact investors should be aware of is the likelihood of higher taxes for wealthier Americans. Though it’s hard to know when and how much rates will increase, good financial advice can help taxpayers minimize their tax bills in some cases. For example, Americans might take investment gains now, while capital gains rates are still relatively low.

4. Don’t Disregard Quality
Since March, the lowest-quality companies have had the best-performing stocks. Punished in the depths of the financial crisis, they have rebounded on hopes of a recovery. For example, banks, industrial firms, or very small companies—i.e., risky firms highly influenced by the financial crisis and the recession—have seen their shares double or triple in price.

Meanwhile, companies with stable, consistent businesses have often languished in the stock market.

Don’t expect that trend to continue. In fact, the trend may have already ended.

Consider the firms that have done best over the last 12 months in boosting revenue. According to Capital IQ, the top 100 revenue-raisers in the S&P 500 are up a median of 50.3% since the March low, while the firms with the 100 worst 12-month sales-growth records have rocketed higher by a median of 96.7%.

In the last month, though, the performance between the two groups began evening out, and in the past week the trend has reversed entirely. In the first week of November, the median quality firm is up 0.6%, while the median worst firm is actually down 0.2%.

John Merrill, chief investment officer at Tanglewood Wealth Management, says the shift may be the result of a new kind of investor entering the market. These stock managers have been cautious for months, but now they believe they need to start buying. Still wary of risk, “They’re going to take the safest step into the market,” Merrill says.

Firms with strong fundamentals also can be more resilient long-term bets and may be selling at cheaper prices after the recent rally, Sutherland says. “There are a lot of quality companies selling at great prices,” he says.

The same may be true in the bond market. Porter warns against buying high-yielding junk bonds after an “incredible run” for the risky investments.

5. Don’t Forget What You Learned
The sudden drop in stocks in 2008 and early 2009 taught every investor what can go wrong. Financial experts say these lessons shouldn’t be forgotten, even amid a stock market rally.

“People should always be thinking about those worst-case scenarios,” says Medland. The biggest mistake in a crisis, he says, is to not have a plan in advance.

The crisis also taught investors something about themselves, about their ability to invest for the long-term without selling low and buying high.

If you panicked in March and sold all your stock, you’ve lost out on big gains. If you’re susceptible to such investing mistakes in times of crisis, maybe you should pursue a more conservative strategy, Elser says.

“People who jump in and out of the market probably shouldn’t be in the market,” Elser says. “You either have that tolerance for volatility or you don’t.”

For many investors, “one lesson is maybe they took on too much risk,” Benningfield says.

Against the backdrop of a tough job market, investors are desperate for returns from their investments. They’re still smarting from huge holes in their portfolio caused by the market meltdown. But it’s important to remember: If you lost big on risky investments in 2008 and early 2009, the solution is not to take on even more risk in an attempt to win back your losses.

Source:businessweek.com

At 45 years old, after 15 years at her current job, Mary received a notice that her employer was discontinuing it’s defined benefit pension plan. She would not lose the accumulated value up to this point however, the company would no longer be contributing to the plan. This meant that Mary and the other employees were now wholly responsible for funding their retirement.

Mary had counted on that pension for; the expense of raising a family, managing a household, and saving for college made it difficult for her and her husband Joe to commit money towards their retirement. They had hoped Mary’s pension income along with Social Security, the small amount of savings in their 401k, and part-time work would cover their expenses during retirement. Would they have to work forever just to pay their bills? What would happen if they ran out of savings, or felt they were no longer able to work?

The defined benefit pension provides a benefit at retirement, an ongoing stream of income, often based on a formula of compensation and length of employment. The employer funds the plan, calculated to determine the amount needed at to provide the benefit. Several options for distribution are usually available including a single life distribution that ends at the death of the pensioner or a survivorship option that provides a reduced benefit that continues through the lifetime of the surviving spouse.

The income is usually a percentage of actual compensation during the years of employment. Some plans have cost-of-living adjustments to safeguard against rising costs while others are vulnerable to the loss of purchasing power caused by inflation. Personal savings, IRA’s and 401k’s are still important to help fill the gaps between income and expenses, as well as providing for lump sum withdrawals and emergency resources.

The responsibility of making sure the plan benefit is available at retirement is the responsibility of the employer. The value of the plan is subject to periodic review by an actuary to ensure it is on track to meet the obligations. During prosperous times with strong investment performance the plans might become over funded, exceeding the obligations due. Other times, poor performance, could cause the plan to become underfunded. The employer would be responsible for bringing it back to funded status.

During the 1990′s a shift began to occur regarding retirement benefits provided by employers. The costs of funding and the complicated administration caused many employers to begin freezing these plans and offering only defined contribution (401k) plans. These plans do not provide a defined benefit, it is unknown; only the contribution has a value. Investment performance and contributions determine the plan value; it may be more or less than the contributions at any time, including retirement.

By making the move from a defined benefit plan to a defined contribution plan the security of a no-cost continuous income stream escapes us. The responsibility of funding retirement moves from the employer to the employee. The employee makes pre-tax contributions to the plan through payroll deductions and directs it to the investment sub-accounts offered. The employer may or may not choose to contribute to the plan.

There is much discussion at this time concerning new retirement options; the decline of the pension, concerns about the longevity of Social Security, and the cyclical market declines will require us to be pro-active towards our retirement. Working longer, saving throughout our career and more employee education concerning retirement planning are steps in the right direction.

Source:Ezinearticles.com

If you read the biographies of some of the world’s greatest entrepreneurial capitalists in America you will laugh that many of these businessmen did not have huge business plans at all. Rather, their businesses were conceived on the back of napkins at restaurants or even at bars. It’s true. Still, when it comes to planning your retirement strategy last thing you want to do is plan your future on the back of a napkin. You’re going to need some professional advice.

It is recommended that you contact a financial planner to go over all of your assets, and plan a strategy for your retirement. They say that if you fail to plan properly, you are doing nothing more than planning to fail. Believe me failure is not an option when it comes to retirement strategy, you must think ahead and be very careful.

It is important to contact a financial advisor that also works with a team of lawyers and accountants to go over wills, trusts, and your long-term asset strategies. After all, there will be family involved, legal issues, real estate, stocks and bonds, and perhaps, a pension or retirement income. If you play your cards right you should be able to live well into your senior years.

Unfortunately, far too many people today consider themselves in the middle class, yet are strung out in credit card debt paying 18% the wrong way rather than earning 6.7% each year on their investments or stock portfolios. Then their only hope is to win the lottery; and a strategy that is a bit like planning your retirement on the back of a napkin. Please consider all this.

Source:Ezinearticles.com

Last year, retirees collecting Social Security benefits received one of the highest cost of living adjustment (COLA) increases seen since the 1980s. Unfortunately, that increase may be the last one they see for a few years.

If you are retired and receiving Social Security benefits, you know that your benefits are increased each year to help you keep up with inflation. This is called a cost of living adjustment, or COLA. The COLA is announced in October of each year and is based on the CPI-W (the Consumer Price Index for Urban Wage Earners and Clerical Workers) from the 3rd quarter of the previous year to the 3rd quarter of the current year. Changes announced in October go into effect in January of the next year.

In 2009, retirees saw their benefits increase by 5.8%, due mainly to the high cost of gas during 2008. This was much higher than normal, with the average increase being around 2.8%. Unfortunately, the Congressional Budget Office (CBO) is estimating that there will be no increase in benefits for the years 2010 through 2012.

The reason that there may not be any COLAs for the next few years is a law that says that no further COLAs may be given until the CPI-W exceeds the level on which the previous adjustment was based. Since gas prices have gone back down, the CPI-W has also decreased and is not expected to get back to the level it was at (when the 2009 COLA was announced) until the year 2011.

If you’re already receiving Social Security, you probably are also aware that Medicare Part B premiums have also been rising. Thankfully, there is good news for the majority of retirees who have their premiums deducted from their benefit checks. There is a “hold harmless” provision that says that Social Security retirement benefits will not decrease as a result of an increase in the Part B premium. So even if benefits stay the same and Part B premiums increase, your check will not go down.

However, the “hold harmless” provision does not apply to new Social Security recipients, Medicare participants who are not yet receiving retirement benefits and high income people. If you are unfortunate enough to fall into any of these groups, you’ll pay higher premiums to make up for the participants who are covered under the “hold harmless” rules. This may seem unfair, but this scenario (where benefits do not rise but Medicare premiums do go up) was never expected to happen, because it was never expected that Social Security would not receive a cost of living adjustment since they were made automatic in 1975.

The reason high income earners will see higher Medicare premiums is due to the Medicare Modernization Act, which will be completely phased-in this year. This act basically says that high income beneficiaries will pay a larger portion of the cost of Medicare, based on their income. While this act is not the focus of this article, the combination of the Medicare Modernization Act with no COLAs for Social Security retirement benefits could mean smaller checks for people above certain income levels for the next few years.

Bottom line, if you’re collecting Social Security you’re going to learn the true meaning of “fixed income” over the next few years. To prepare you should keep a close eye on your spending, and if you’re a high income earner you should be aware of tax and financial planning strategies that could cause a spike in income and thus a spike in your Medicare costs. These strategies need to be carefully planned and coordinated so that your increase in Medicare costs don’t outweigh the benefits of the planning strategies.

Learn how to get the maximum Social Security benefits you are entitled to at Your Guide to Social Security Retirement Income, a website created to help baby boomers learn everything they need to know to make the most out of their Social Security, including when to apply, how to coordinate spousal benefits, how to minimize the taxes they pay on Social Security and much more. http://www.socialsecurityretirementincome.com.

Source:Ezinearticles.com

Good day to the hard working citizens of the United States of America. As the financial crisis continues to wear on, it has become very evident that there are a lot of people out there having a hard time making sense of what is going on and how it will impact them in the future. There is no clear-cut answer, but I do know that sitting on your hands or sticking you head in the sand will not help matters. So what do we do? I attended a presentation recently on developing wealth and as I sat and listened to the speaker I was struck by one simple fact. Out of every 1000 baby boomers (45-65 years old) 5% will retire with enough money to live out their lives comfortably and 95% will not. I do not know how that makes you feel but as a baby boomer that scares me a little, not because I might be in 95%, but because we are doing nothing about it. What are we teaching Generation X’s and Y’s. Will they be I same situation we are in today? Who knows where Social Security is going to be in 40 or 50 years. What I propose is that we start today and make some changes and set a good example for future generations to follow.

These changes do not have to be huge and far reaching. Lets start by living within our means. We should not spend more than we bring home each week, otherwise we are using credit to keep us afloat, and we all know where that leads. Second, let us set some specific goals (e.g. college for the children in 5 years, retirement in November 2026) and from there, you can begin to develop a plan, with some help of course. In this day and age of multiple retirement vehicles, new tax laws every time you turn around, and college education that can cost more than a house, your finances are not just the checkbook anymore. You need to factor in your current financial position, your net worth, your accumulation goals, your tax strategies (yes the government will not do it for you), your retirement plans, risk management and estate planning. Well, if that sound a bit overwhelming, it is.

Take for example retirement. Are you involved in a defined benefit program or a defined contribution plan at work? How does that affect your taxes? Do you put money into a Roth IRA or a traditional IRA? How does that help you at retirement? Should I put money into all of these? How much money am I allowed to contribute or do I make too much money to contribute? These are all valid questions that need to be answered to have an effective plan, and this is only one portion of your financial picture. How is this area integrated into the whole picture so that all of your goals are achieved? If you do not have the answer to these questions, you are not alone. Millions of American’s are in the same situation.

So, let me ask you one last question. What happens if you get sick, your car gets sick or your house is sick? You hire a professional to fix it. I bet you have a doctor that knows everything about you, an auto mechanic that knows your car better than you and you use a qualified plumber, electrician or roofer to make home repairs. However, what happens when your finances are sick? Do you have someone that knows how to fix it? I propose you seek out professional help, i.e. a financial advisor. The cost of their service is usually very reasonable compared to the consequences of doing nothing. So lets plan a good future for us, and the generations to come.

Source:Ezinearticles.com

Typical nightmares use to include showing up for work in your underwear or ghosts in your home. At the very worse a nightmare may have been the death of a close family member or a home burglar. However, this is no longer the stuff that nightmares are made of, as many people are now finding their restless nights caused by the frighteningly real nightmare of getting laid off at fifty with no pension or retirement funds.

Unfortunately, for a large amount of Americans this is not a nightmare, because companies are finding themselves forced with bankruptcy and employees who thought their futures are safe are finding themselves jobless, pension-less, and with nowhere to turn for help. So how can you beat this nightmare scenario that happens so close to retirement, but yet far from the end of your life? Well, the first step is by taking your investments into your own hands and finding a company you can trust.

It used to be that if a corporation had a large name your investments and future were most likely safe, but it seems even the largest corporations are taking a hit forced to lean on federal bailout money for aid. A large portion of the cause is because these large corporations all followed the same investment principles which have now backfired and left most of them penniless or severely in debt. Thus, step one is to make sure that your funds are not being invested by a company with the same methods.

Today’s stock market is a lot rockier than the past, but when used correctly it can still be a wonderful way to build an investment or build savings for the future. The trick, however, is learning how to balance your retirement investments so that you have a safety net and room to maximize your returns. Learning how to invest with calculated risks is the first step in combining safety and risk.

Every time you contribute money to an investment fund you should know that a margin of your investment is guaranteed. In other words, if you contribute $100 a month you should make sure that at least half of that money is safe at all costs, even if this means that you will not see a very sizable profit from it. This way you know that when it comes time to retire you will have a suitable amount of money, even if the figure is not what you envisioned.

This also takes away the nightmares of losing it all, because if you guarantee a portion of your investment you will never have to fear losing it all. With the remaining amount of your investment you can then focus on taking larger calculated risks that have huger pay-offs. A good financial advisor can help guide you through your best choices and help you understand how much you are wagering. This way you will always have funds, with the potential to earn more as the years pass without any attached fear.

Source:Ezinearticles.com

How long will you statistically live? You probably think that statistically you’ll live to about 75. But that’s somewhat of a misconception. Having a better idea on what life expectancy means will help you better project how many years of retirement you need to plan for. And clearing up what life expectancy means to you is what this article is about.

The life expectancy (LE) for people born in the year 1900 was 53. That means the 50% of them will have died by then. Of course, 50% will live longer than 53. Mortality data confirms the LE of past generations. Life expectancy is statistically the ’50/50′ age that people will live to – as measured from a given starting age!

Today a person born in 2000 is expected to live 77 years – from birth. So 50% of them will live beyond the year 2077. The increase in LE during the past century resulted from improved medical and health care. These life expectancies are based on the whole population.

Life expectancy data includes additional facts beyond age too. Among other things, it keeps track of a person’s sex and socioeconomic status. Women born in the year 2000 have a LE of 79.9 while that of men is only 74. Well-off white collar workers will statistically live longer then poorer blue collar workers.

If you watch your life style and health – and just keep living - you increase your remaining LE. And it’s your remaining LE that’s important for retirement planning. So you’re not destined to kick the bucket at the 75 year mark – statistically!

Your remaining LE means you have more years left than you think. That’s because life expectancy is based on the age from which you measure years to death. Most often we consider the beginning age as your birth. In that case, a lot of child aged deaths can eat away at the age by which 50% of all will die.

If you start at a higher age, then your expected years to death increases above what you would have expected if you measured mortality from birth. In fact, the older you get, the further beyond your original (i.e. birth-based) life expectancy you’re expected to live!

For retirement planning, you should use your remaining LE based on starting at age 65. In that case we keep track of what percent of people who have reached 65 will die at any given older age. So the remaining LE of people who have attained 65 will be the age that 50% of them have died. And that’ll be an older age than the life expectancy (from birth) of those who did in fact reach 65.

Insurance statisticians keep track of this extended LE for persons based on their current age. The IRS publishes its own tables on these (for required distributions of IRAs). The IRS calls it ‘the life expectancy factor’ which is the number of years more you have to live – statistically. You have a 50% chance of outliving these too!

Examples from the IRS table show that a person who is:

Age 60 is expected to live to 85.2 – so 25.2 remaining years to live

Age 65 is expected to live to 86 – so 21 remaining years to live

Age 70 is expected to live to 87 – so 17 remaining years to live

Age 75 is expected to live to 88.4 – so 13.4 remaining years to live

You can see that the older you live, the longer you’re statistically expected to live.

In any case, a 65 year old should plan out his retirement years – for investment and income purposes as if he were going to live another 20 years or so – at least. Why? Because that’s they way mortality works.

Source:Ezinearticles.com

Technically, you can ALWAYS withdraw from your Simplified Employee Pension (SEP-IRA) or your Tax Deferred Annuity. However, it is not advised to withdraw funds prior to reaching the age of 59 1/2.

Likely Consequences For Early Withdrawal – 10% Penalty
If you are under the age of 59 1/2, there may be significant tax consequences from withdrawing. Specifically, you are likely subject to a 10% IRS penalty for early withdrawal of both a Simplified Employee Pension (SEP-IRA) & a Tax Deferred Annuity. This 10% penalty is in addition to the ordinary income tax rate you would normally pay.

General Example
For instance, if, of the total $10,000 value of the two plans, $2,000 is taxable, you would be subject to ordinary income tax (i.e.~35%) of the $2,000 or $700 and an ADDITIONAL IRS Penalty of 10% of $2,000 or $200, bringing your total taxes to $900.

However, there are certain exceptions for early withdrawal of each retirement plan in which you would NOT be subject to the 10% IRS tax rule.

No Penalty Exceptions – Simplified Employee Pension (SEP-IRA)
The exceptions to the 10% IRS penalty rule are if the withdrawal was:

1. Death/Disability – upon death or having developed a disability
2. Payment Plan – part of “substantially equal payments” over your lifetime
3. Medical Expenses – for payment of un-reimbursed medical expenses exceeding 7.5% of your adjusted gross income
4. Medical Insurance – for payment of your medical insurance or your spouse & dependents medical insurance. The withdrawal must occur during these scenarios: a) if they lost their job, b) have received unemployment for 12 weeks straight, c) receives the unemployment on the following year or d) receives distributions no later than 60 days after re-employment.
5. Higher Education Expenses – for qualified higher education expenses
6. Home Purchase – for the purchase, build or renovation of a first home for the first $10,000

No Penalty Exceptions – Tax Deferred Annuity
The exceptions to the 10% IRS penalty rule are if the withdrawal was:

1. Death/Disability – upon death or having developed a disability
2. Older than 55 – when you were 55 or older and you retired or left your job
3. Payment Plan – part of “substantially equal payments” over your lifetime
4. Medical Expenses – for payment of un-reimbursed medical expenses exceeding 7.5% of your adjusted gross income
5. Divorce – required by a divorce decree or separation agreement (“qualified domestic relations court order”)

Another Option – Rollover Tax Free
Another option instead of withdrawing funds from either of these two accounts, is rolling them into another retirement plan tax-free such as a traditional IRA or other qualified retirement plan. Other plans, such as a Roth IRA, may provide additional tax benefits to you.

Final Note – 2010 Traditional IRA Conversion into a Roth IRA
In 2010, Traditional IRA conversions into a Roth IRA are allowed for everyone, even if you don’t currently qualify for the conversion. Remember, Roth IRA’s are funded with After-Tax Dollars BUT Grow Tax Free and are NOT subject to tax following withdrawal after the age of 59 1/2. Please note that the additional income taxes due to the conversion, can be spread over two years (i.e. 2011 and 2012 returns).

Source:Ezinearticles.com

Underestimating the importance of leisure in planning for retirement is the biggest mistake retirees make. They put their finances in order and assume everything else will take care of itself. But retirement satisfaction depends on how you spend your time, not your money.

During the working years leisure is a rare commodity. Overtime, second jobs, family duties and household tasks leave little time to ourselves. Much of our free time is eaten up sitting in traffic and weekends are jammed with chores. Many employees even forgo their two week vacation, fearing a pile up of work on their return. Technology, rather than freeing up time, encroaches more and more on our breathing space. We answer calls when walking down the street and prop up our lap top while flying to our next appointment. No wonder it’s hard to believe leisure could ever be a concern.

But leisure is a very different thing when it is the only time you have. After an initial honeymoon, retirement leisure poses many unexpected challenges. Once free of the constraints and responsibilities of work, we are also free of the identity, purpose, and social contact our jobs provide. The need to be productive, recognized, challenged or social will not disappear the day you retire but must be met in new ways.

Planning for dynamic use of time is as essential to a successful retirement as planning for a secure financial future. Those who fail to adjust to unstructured, unlimited time become bored, depressed and aimless. But those who take advantage of the opportunities leisure offers, make retirement the best time of their lives.

Source:Ezinearticles.com

While you can’t control the markets, you do have some control over how and when you take withdrawals from your portfolio. And without even knowing it, some folks are strangling the very goose that lays their golden retirement nest eggs.

The problem arises when portfolio withdrawals are made by liquidating otherwise good investments that have dropped in value. Once those investments are sold, any opportunity for recovery in value is lost, making the losses permanent and resulting in faster shrinkage of the portfolio.

Suppose that Jim and Barbara want to draw $1,000 a month from their investment portfolio to supplement their social security, pensions, and income from rental property. They’ll be smarter to draw from interest, dividends, and any stable portion of their portfolio (such as cash or money market).

The point is not that you shouldn’t draw from principal, but rather that you shouldn’t draw from the portion of your principal that is down in value. Of course, the flipside is that you should always have a portion of your portfolio in stable resources to continue providing your “retirement paycheck” even when times are tough.

Depending on your needs and how flexible you can be, you may need to have 2 to 3 years of living expenses in short-term, “safe” investments. As you draw on this cushion and use it up–if your more growth-oriented investments have recovered to some degree–then that’s when you liquidate some of them and replenish the safe money.

One of the most common flaws I see in retirement income planning is a generic across-the-board liquidation of portfolio investments regardless if they’re up or down. And unless you know some neat trick to always make your investments go up, then that’s pretty much a guaranteed way to prematurely shrink your nest egg.

Don’t get caught in that trap. No auto-pilot arrangement or standardized withdrawal model can substitute for an intelligent and tactical approach with your withdrawals.

Let the goose breathe a little and keep those golden eggs coming.

Source:Ezinearticles.com