In Perspectives

Planning for retirement is something that most people put off until it is too late to have much impact. The unfortunate fact is that most of us will spend more time planning one vacation than we’ll spend on retirement planning in a lifetime. However, the disappearance of traditional pension plans, increasing medical costs, uncertainty about the strength of Social Security and other factors are forcing a change in mindset.  A secure and happy retirement lifestyle in the future will depend on setting retirement goals early and carefully planning the steps necessary to achieve them.

Attitudes toward retirement can vary greatly. Some resist the idea, seeing themselves being put out to pasture with the potential loss of status and sense of purpose their career provides. Others look forward to pursuing new interests and having the freedom to do what they wish. It is our belief that complete retirement planning addresses both the emotional and financial aspects of transitioning from full employment to retirement.
There are more recreational, educational and second career opportunities today for retirees than ever before. The  retirement years can be a rich and fulfilling time. However, freedom from financial worries is essential if you want to take full advantage of the opportunities available to you.   Thus, the focus of this series will be planning for financial security in retirement.

Retirement Planning has become a very popular topic in recent times. This is not surprising in light of several important trends. First, the population is growing older and more people than ever are near or just entering retirement. The baby boomers have now entered their fifties and sixties and suddenly retirement doesn’t seem so far away. This shift in demographics will have a profound effect on the quality of life in retirement and nearly every other aspect of our culture as well. Not only will the older population be growing in numbers, but average life expectancy will continue to increase, making the need for a substantial retirement nest-egg more critical than ever. Many of us will live one-third or more of our lives in retirement and there is real concern about outliving our assets. Further, there is less confidence in the long-term viability of the social security system. There is a growing awareness that an ever greater part of retirement income must come from private sources such as employer plans and personal savings.

Let’s look more closely at the planning process itself. What follows is an overview and each area will be explored in greater detail in future posts. Any good financial plan must begin with an analysis of the facts. Just as no physician worth his salt would attempt a diagnosis without first conducting an examination of the patient, financial alternatives should not be considered until resources and needs are identified. For this reason the process starts with the development of a personal financial profile. This includes an assessment of net worth (what you own less what you owe), cash flow (what you earn less what you spend), and taxes (what you owe the government now and later).

The next step is to attempt a forecast of the level of income needed in retirement. We start with our current budget and use that as a basis to project what our needs will be at retirement and beyond. To do this, a number of assumptions (educated guesses actually) must be made about the future which will certainly change over time. That is why the planning process is ongoing and dynamic. Some things we need to know include: the date we plan to retire, the expected rate of inflation before and during retirement, and how long retirement will last (life expectancy).

The next step is to forecast what will be available at retirement from Social Security, employer plans, and personal savings. Again we must make assumptions about how much we can save, rates of return on savings and investments, etc. This stage of the analysis requires a critical self- evaluation about career goals, personal discipline to save, and investment risk tolerance, among other things.  For many, it will also require the assistance of an advisor with a full understanding of complicated topics such as Social Security and Medicare.
Armed with a realistic forecast of what retirement will cost and what will be available to pay for it, the choices become clearer. Those who anticipate a surplus (more income than expenses) can breathe a little easier and simply work on refinements to improve the result. Those facing a deficit are faced with tougher decisions. They may have to lower retirement lifestyle expec­tations or increase investment risk to achieve a higher rate of return. Alternatively, they may have to reduce their current standard of living or continue to work longer in order to save more for later. This is where careful planning pays off and the sooner the better.

Personal investment strategy plays a large part in the retirement planning process. Understanding the various types of investments, the risk involved, and tax ramifications, can make a big difference in how your nest egg grows over time. Selecting capable advisors when help is needed can be equally important to a happy outcome.

The many facets of retirement planning for financial security will be covered over the next several months. Next time we will look more closely at how to develop a personal financial profile.

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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