In Perspectives
We sat down with Tom Blower, a Senior Wealth Planner at Legacy Trust, to talk about retirement planning and supplemental retirement income.
Q: What is supplemental retirement income and why is it desirable for retirement planning?

A: Supplemental retirement income is any additional source of income produced through part-time work after retiring from full-time employment. It is desirable because it does several things, most notably, it reduces the amount of money that you have to pull from your retirement savings, which is important in retirement planning. This in turn allows your savings to continue to grow and work for you, which should produce additional security for you in the future.

Q: That is an interesting argument for supplemental retirement income. Can you elaborate on the actual outcomes on retirement planning?

A: Let’s use some basic math to illustrate the impact of working into retirement: let’s say you are transitioned into part-time work by your current employer to focus on your most effective skills. They pay you $30,000 per year, you work a fraction of the time and you do this for five years. Over that time period, you made $150,000, all of which you ended up using to support your lifestyle. The key here is that you probably would have spent that $150,000 regardless if you were working. So, not only did you not spend down your assets by $150,000 but you have allowed your other assets to grow (in theory) by not using them as much to support your lifestyle expenses. The impact can be very dynamic to your retirement planning.

Q: Should more people consider ways to increase their supplemental retirement income?

A: While adding to retirement income is helpful to everybody, the ways to go about that additional income is not suitable for everyone. Some people are unable to continue working due to health concerns (both physical and mental), deterioration of skills, lack of continued interest from the employer, etc. Other individuals could be burned out from a long working career and cannot fathom the thought of working for one more day.

Q: This sounds great, but how would someone get started planning for this? What should they consider?

A: The first thing you should do is meet with a trusted professional that will work with you on cash flow based retirement planning. Create a conservative model showing you not working any longer, with all of your projected expenses and current assets taken into account. Once that model has been developed, work with your advisor to add $30,000 of income into your plan for a few years and see the impact. It might be all the motivation you need! Then, approach your Human Resources department or another potential employer to gauge interest on the concept of providing your expertise to them on a limited but cost effective basis to them.

An “encore career” is another option for someone considering ways to gain additional retirement income. An encore career is a career that combines personal interest with continued income. Often this type of work can also have a social impact. Many people who pursue encore careers find paid positions in nonprofits, social services, education and environmental fields. These positions could even substitute retirement for some, by providing personal satisfaction after retiring from the corporate sector. Encore careers would essentially kill two birds with one stone – providing supplemental retirement income and also personal gratification.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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