Getting the Most From Your Retirement

As people work toward retirement, many look forward to having the time to pursue new interests, travel, or just spend time with their grandchildren. Part of enjoying retirement, though, is having enough money to know your needs, and even some of your wants, are covered.

Although many retirees have spent their working lives building up a comfortable nest egg, a recent survey by Prudential Financial, Inc. found that six in 10 are trying to live on their Social Security and pension benefits while keeping their retirement savings intact.

“Even though people have saved money preparing for retirement, they are reluctant to spend it during their retirement years,” says David Odenath, president of Prudential Annuities, the domestic annuity arm of Prudential Financial, Inc. The survey showed that these retirees feared becoming a burden to their families or outliving their savings. Retirees would rather cut expenses than risk eating into their savings. “Today’s retirees have worked hard all their lives and they shouldn’t have to make sacrifices in retirement,” adds Odenath.

Along with announcing the research results, Prudential has identified five mistakes retirees should avoid.

1. Not planning for life and death decisions -- Retirees often fail to address what happens if they die or become incapacitated. This mistake affects not only what happens to them personally, but also to their assets. To avoid unpleasant consequences, make a will so that you decide how your assets will be distributed at death, prepare a health-care directive appointing someone to make health care decisions if you are incapacitated, and give someone you trust a power of attorney to make financial decisions for you. Consult your attorney for specific guidance on these and related issues.

2. Choosing the wrong assets for income -- It may be better to use taxable investments first, allowing assets in tax-qualified retirement accounts to continue growing tax deferred. This also allows retirees to capitalize on lower tax rates for long-term capital gains rather than the higher rates on ordinary income.

3. Choosing the wrong payout/income options -- This is a common trap. These decisions will determine how long retirement income lasts, its size and whether it passes on to survivors after the retiree’s death. This is a complex decision with huge impact; it is best to get the advice of a financial professional to help sort through the options.

Retirees are looking at annuities as one way of ensuring retirement income. The Prudential survey showed that among retirees who currently use a portion of their savings to generate income, 65 percent find “attractive,” an annuity’s feature of providing a death benefit that is at least equal to the amount they invested. Seventy percent were attracted to an annuity’s guaranteed monthly payments for a fixed period or for life.

4. Not managing your retirement income portfolio -- Now more than ever, retirees need to follow the basics of successful investing: understanding tolerance for risk, diversifying assets and staying on top of fluctuating market conditions.

5. Getting complacent -- Retirees need to stay personally involved in managing their assets and be willing to seek professional help when necessary.

“There are so many options retirees should be aware of, and relying on a trusted financial professional is imperative,” adds Odenath. “With unbiased professional advice that includes sound financial planning in retirement and an effective mix of modern product solutions, retirees can live comfortably in retirement while maintaining the financial independence they desire.”

As a result, Prudential Annuities is leading "Living in Retirement," a comprehensive outreach designed to raise awareness among retirees and soon-to-be-retirees about the importance of financial planning before and during retirement.

Through the education of its investments professionals through Continuing Education courses, and the general public in client seminars, Prudential is hoping to provide retirees with the knowledge and tools they need to make educated decisions during such an important time in life.

“Helping retirees grow and protect their wealth during retirement is our main focus,” concludes Odenath. “By providing them with sound financial choices, we hope to help them secure a comfortable tomorrow.”

For more information on retirement planning and annuities, visit www.prudential.com. For a complete list of the mistakes to avoid in retirement, go to www.prudential.com/retirement_mistakes.

Variable Annuities are issued by Pruco Life Insurance Company, (in New York by Pruco Life insurance Company of New Jersey) 213 Washington Street, Newark, NJ 07102-2992, American Skandia Life Assurance Corporation, Shelton CT 06484 and distributed by American Skandia Marketing, Incorporated and Prudential Investment Management Services LLC, Three Gateway Center 14th floor, Newark, NJ 07102. All are Prudential Financial companies. Each company is solely responsible for its own respective financial conditions and contractual obligations.

Courtesy of ARA Content