from qualified plans. Minimum distribution requirements can be complicated. Go to the Older Americans’ Tax Guide at www.irs.gov for help sorting it out.
You may need to look for ways to shelter that taxable income. “This is where legacy planning comes in,” Roman says. “If you haven’t already thought about your mortality, it should become a focal point for you to talk about what you would like to do for your dependents, your loved ones, your grandchildren, as well as your church or charity.” Funds not needed for living expenses could be redirected to a life insurance policy, he says.
MANAGE YOUR MONEY
While one’s needs are highly individual, the assumption is that as you age, you will need more income, says Roman. So you will need a portfolio heavily weighted in bonds and income-generating vehicles. However, keep your options open.
Consider dividend-paying stocks that will also give you some potential for growth, says Roman. There are a whole slew of bonds, such as tax-free municipal bonds, corporate bonds, and treasuries to consider as well. Fixed income options would include guaranteed investments contracts and annuities. As you decide, Roman cautions: “Be conservative, you don’t want to deplete your assets before your death. Even at 70 you could have a lot of living to do. You could exceed your life expectancy.”
ORGANIZE YOUR DOCUMENTS
At this point in your life, there’s no time to procrastinate. You need to take care of your business now. It’s time to meet with an attorney to prepare an updated will, durable powers of attorney, healthcare proxy, and living will. All of those documents will serve you well when you need them.
A good place to study up on these issues is the wills and estate planning section of www.nolo.com. Also, make sure to tell someone you trust, such as your lawyer and a family friend, where the documents are to avoid confusion.
Take this time to review your financial situation so you can set sail on your new life with ease. Look at Pree. She loves that her time is her own and enjoys simple things such as friends
and fishing. Her faith has strengthened. She says, “I’ve been able to survive sickness and having no job. Somehow it’s all working out.” BE
The Advice For Your 70s
The assumption is that you will need more income as you age, so you will need a portfolio heavily weighted in bonds and income-generating vehicles. The person who might want 100% in fixed assets is likely someone who needs income to meet living expenses now.
Realize, however, that you have more options than just bonds, says Roman. Consider dividend paying stocks that will also give you some potential for growth. Or you could reallocate your portfolio entirely and invest in an annuity, says Roman. Guaranteed investment contracts (GICs) are fixed assets with no appreciation potential but which provide income.
While you want to get more conservative in your 70s, remember, says Roman, “You could have another 10 to 20 years or more, so you might need some growth, too.”