Recognize the Role of the Newly Retired

Physician's Money DigestJuly31 2004
Volume 11
Issue 14

After years of hard work,you're looking forward toretirement. But just becauseyou're going to stop workingdoesn't mean you can stop paying attentionto your finances. In fact, it may bemore important now than ever to reviewyour assets and plan for the future.

First Things First

The first thing you will need to consideris what your sources of incomewill be. If you retire after age 62 youmay be eligible for Social Security benefits,but you may also have additionalsources of income such as a pensionplan, 401(k), or other investments.Once you reach age 701/2 you arerequired to take distributions from yourtax-deferred retirement accounts. You'llwant to factor this into your overallfinancial plan.

Once you have determined yoursources of income, you should considerhow much money you will need foryour new lifestyle. The truth is thatmost retired individuals spend about80% of their preretirement income onan annual basis. As a result, before youretire officially, you should take thetime to list your expenses, taking intoaccount your mortgage, anticipatedmedical expenses, insurance premiums,deductibles, entertainment and travelexpenses, and any other costs you thinkyou might incur.

Crucial Considerations

After you determine where your incomeis coming from and how much youneed, it may be time to consider somethings that you didn't have to think aboutwhen you were working. Now might be agood time to consider long-term careinsurance. This type of insurance coversyour expenses should you need hospiceor nursing home care. It also helps protectyour estate from the expenses ofthese services, should you need them.

It may also be appropriate to reviewsome of your estate planning options atthis point in your life. Take a look at yourwill and trust to ensure that the properbeneficiaries are named. You may want tothink about gifting some of your moneyto your children or grandchildren now, asthis can increase the amount of wealthyou're able to pass on to them, whilereducing the amount of your estate thatwill be subject to taxes.

This article was provided by AG Edwards & Sons,Inc, member SIPC. AG Edwards does not renderlegal, accounting, or tax preparation advice. Youshould consult your tax and legal advisors for yourspecific situation.

Joseph F. Lagowski is vice president,investments, and a financial consultant with AG Edwards in Hillsborough, NJ. He welcomesquestions or comments at 800-288-0901 or This article was provided by AGEdwards & Sons, Inc, member SIPC.

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