Retirement Planning Tips For Late Starters

BERLIN – For those quickly approaching retirement, proper planning may have been put on hold for a variety of reasons. It could have been due to a lack of savings as people find themselves dealing with such financial strains as higher education costs for their children or caring for elderly parents. Others may have set up 401(k) plans through their employers but have lost track of the assets held there. Regardless of the reason, it’s never too late to construct an appropriate retirement plan.

“Whether you’re behind in your savings or just don’t know how much you may need, Merrill Lynch’s Retirement Income Service can help you develop a plan,” said Stephen Mitchell, Director of Education and Planning in Merrill Lynch’s Retirement Group. “Our clients are often pleasantly surprised at what’s possible, even at a late date.”

With retirement only a few years away, some pre-retirees may look at their accounts and wonder how they can achieve their desired lifestyle. According to Mitchell, one solution to a savings shortfall would be to work a few extra years. While this may not fit your original view of retirement, Mitchell points out that this is a great time to do something you love, perhaps part time or even on a consultative basis. The extra income can postpone the need to tap retirement savings or start Social Security payments, and can provide health care benefits as well.

Some people may have been saving for retirement for many years but have not integrated these savings into their overall financial strategy.

“They have assets scattered among many investments and don’t know how they can best convert those assets to income,” says Mitchell. “These are questions that can easily be answered by sitting down with your Financial Advisor and working out a strategic retirement income strategy.”

Your Financial Advisor can explain the nuances of proper retirement planning. For example, Mitchell says the oft-quoted formula that retirees need 60 percent to 80 percent of their pre-retirement incomes to maintain their current lifestyle is too general and imprecise to be helpful. Many people are paying off their mortgages later, so the old rule of thumb may no longer apply. “The amount of money that families spend in retirement varies a great deal,” he says. “It’s important that clients work with their advisors to find the number that fits who they are and what they want.”

As part of your retirement strategy, take a close look at your portfolio.

“Prospective retirees need to review their asset allocation with their Financial Advisor to make sure it’s appropriate for their objectives, financial circumstances and comfort level with risk,” Mitchell says. “For example, being too heavily weighted in equities runs the risk of a major setback in your retirement plans if there’s a severe market decline. On the other hand, if you are heavily concentrated in fixed income, it may be appropriate to consider adding some equities to help your retirement income keep pace with inflation and reduce the risk of outliving your income stream.”

If you’re just beginning to visualize your retirement, Merrill Lynch has created a number of resources to help at You can answer selected questions from The 2006 Merrill Lynch New Retirement Study and see how your answers compare to others. There’s also information and exercises to help you formulate your vision of retirement.

“If you’re like 71% of the respondents in the study and plan to work in some capacity in your retirement, the New Retirement Illustrator can illustrate the effect that working in retirement can have on your ability to attain your retirement goals,” says Mitchell.

(The writer is a Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-9084.)