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Ask the Expert

Investing in Your Future

Doug Terwilliger


Just because you’ve retired doesn’t mean that you should stop investing your assets. On the contrary!

Prudent control of your money is essential, but retirees should (must) continue to actively invest their assets to maintain their standard of living.

After all, Americans are living longer and spending more years in retirement than ever before.

What kind of investment strategy should I have right before I retire?
Consider reducing your stock ownership and increasing your conservative investments. The Federal Deposit Insurance Corporation (FDIC) suggests that your portfolio include 30 to 60 percent in stocks or stock mutual funds and most of the rest in CDs, bonds, bond funds, or money market accounts.

And then in retirement?
Lean toward conservative, income-producing investments, but don’t rule out stocks or stock funds. The FDIC suggests a possible portfolio of 20 to 40 percent in stock or stock mutual funds and most of the rest in CDs, bonds, bond funds, or money market accounts.

Are there any special tax or withdrawal rules for retirement assets?
Discuss with a financial advisor when to withdraw money from your tax-deferred retirement accounts, such as employer-sponsored retirement plans and traditional IRAs.

Before you start withdrawing money from your retirement accounts, most financial planners suggest setting a target annual withdrawal rate. After age 591⁄2, you can withdraw your money without penalty but are subject to income taxes.

Under IRS rules, you must withdraw a minimum amount from 403(b)s, traditional IRAs, and certain other retirement savings plans by April 1 of the year after you reach age 701⁄2 and each year after that. There is an exception to the rules for someone still working for the employer who sponsors the plan.

How about a reverse mortgage to provide additional income?
Reverse mortgages can help in some situations, such as large medical bills that are not covered, major home repairs, or to help people on low fixed-incomes make ends meet. However, you are reducing your ownership share of the home.

That means that you could have far less money available for other purposes, such as buying into a retirement community later on. A reverse mortgage should usually be used as a last resort, not as an integral part of a retirement strategy.

What else can I do?
Every retiree should stay informed about retirement planning and investing strategies. Consider taking financial planning or investment classes at your local community college (most offer retirees discounted or even free tuition). NEA Member Benefits has a wealth of information and articles as well as free online financial seminars.

NEW! Free Online Financial Seminars for NEA Members and Their Families

The Investing in Your Future program provides quality investment education in a convenient, on-demand format. A series of five courses covers key issues of financial planning and investing:

  • Financial Foundation
  • Introduction to Mutual Funds
  • Introduction to Stocks
  • Analyzing Stock Mutual Funds
  • How to Buy Stocks

Learn techniques for goal setting, budgeting, debt management, retirement planning, saving, and acquiring insurance. Sharpen your investing skills by gaining an understanding of risk and reward and learning about asset allocation, diversification, compounding, and how to identify quality investments and avoid common mistakes.

Education lasts a lifetime—and so does the need to be a smart money manager.

Register today  or call NEA Member Benefits toll free at 1-800-637-4636, Monday–Friday, 8 a.m. to 8 p.m. (or Saturday, 9 a.m. to 1 p.m. EST).

Brought to you by NEA Member Benefits and Better Investing through a grant from the NASD Investor Education Foundation.

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