Planning Ahead - July 23, 2008

Income needs in retirement

Bob CondronJuly 22, 2008 

• Bob Condron, CFP, MSFS, is a registered representative of Bridge Financial Partners. Securities are offered through H.D. Vest Investment ServicesSM, a non bank subsidiary of Wells Fargo & Co. He can be reached at 548-8875 or bcondron@bridgefp.com.

Improve-ments in medicine and science have continued to extend the life span of the average person in the United States. According to the U.S. Department of Health and Human Services, the average 65-year-old could expect to live another 18 years. What is astonish-ing to realize is that at least one-half of those alive at 65 in 2005 will live past 83, assuming there are no continued improvements in health and science!

Hopefully, retirement will include an active lifestyle with travel and leisure. Living longer will undoubtedly come with higher costs for food, clothing and shelter. Additionally, the cost of a longer life will most certainly require health care, medicine and, at times, assistance.

If you have already started your first retirement, consideration needs to be given to how long you will be retired and if your assets will last as long as you do. Low interest rates for CDs and fixed-income securities have reduced household income for many conservative investors. Increased costs for everyday necessities and lower returns may also require the need to use principal, further reducing future income.

Starting your second career may be a necessity in today's economy. Despite the tight labor force, many companies still need experienced, dependable associates. There remains today a shortage in qualified teachers for our public schools, especially math and science. If you enjoy working with young minds and feel you have something to share, teaching may offer you a second career.

Another source of income may be your home. Despite the housing and credit concerns of our current economy, reverse mortgages have increased in popularity. With a reverse mortgage, a lender agrees to pay the homeowner an income based upon the value of their home. The source of the income is a loan against the equity in the home. This loan will be repaid at the home-owner's death, a fixed number of years or the sale of the property.

A reverse mortgage agreement should not be entered into hastily. It is available to homeowners 62 and older. There are costs to establish the agreement and an interest rate on the loan. Carefully review the terms and conditions and I strongly recommend you speak with your legal and tax advisor before signing any agreements.

Working in retirement isn't always about money. I received a phone call from my father the other night. He called to let me know that his old employer was shorthanded and needed a supervisor for a larger construction project. "Pops" decided he needed some exercise, so he took out his old lunch box, filled a thermos of coffee and went to work for the first time in 13 years, at the young age of 74!

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