GESTATTOO

Let's suppose you've had enough of your job and want to retire - tomorrow! What would it take? How could you satisfy yourself that you have the financial wherewithal to walk away from the security of your paycheck?
Before you read ahead, humor me. Play the game out in your head. I don't want to know if you could walk away, just how would you know if you could?
What did you come up with? Does trying to grapple with such a nebulous issue spread over so many years in the future seem overwhelming, impossible?
I will let you in on a big secret. This is really a very simple question.
If you have a great deal of confidence in your retirement plan, you have probably already figured out what I am about to tell you. If you have no idea what it will take or when you will get there, read on...
Financially, retirement planning boils down to three and only three things: cash flow, cash and insurance. If I have these three things, in sufficient quantities, for an indefinite period of time, I am free to ride off into the sunset.
Really? Could it be that easy? Let's examine them one at a time...
Cash flow - While you are working, your cash flow comes from your job or your business. When you retire, your cash flow must come from your assets.
In retirement, cash flow sources fall somewhere along a continuum of certainty. At one end, you have near-term Social Security benefits, fixed annuities and pensions. Examples, on the other end would include rental income, oil and gas royalties and investment income from your portfolio.
The number one job of a retirement portfolio is to produce the cash flow necessary to fill any gap between your retirement expenses and guaranteed sources of income.
Cash - Every household needs a stash of cash held in a readily accessible, risk-free parking place that can be drawn on in the event of an emergency. Ours is held mostly in interest-bearing savings accounts, CDs and ultra-short bills, bonds and commercial paper. This particular bucket of cash is known as your emergency fund.
The emergency fund has a single job. It is to smooth out the ups and downs of markets and the economy. While you are working, that means the emergency fund is used in the event one or both spouses lose their job, became disabled or otherwise can't work. In retirement, the job of the emergency fund is to smooth out the inevitable fluctuations in investment income.
Insurance - Insurance is a mechanism by which we pool together risks we cannot afford to insure individually.
When you are in your 20s and 30s, the most common insurance needs are property, casualty, life and health. In your 40s and 50s, you need to purchase long-term care insurance. In your 60s, life insurance will often become unnecessary but you will have to grapple with Medicare and Medicare Supplement insurance.
The number one rule of insurance is, if you cannot afford to pay for something, insure it. If you cannot afford to replace your house if it burns, you insure that liability. If you cannot afford a lawsuit, you insure the liability. If you cannot afford years and years of long-term care, you insure the liability.
The second rule of insurance is the less you can afford to spend money on an insurance premium, the more you need insurance.
Think about it, if you can't afford $500 for car insurance, you sure can't afford to fix your car if it is in a wreck. If you can't afford $400 a month for health insurance, then you certainly can't afford to pay all the doctor and hospital bills if you were badly injured in that wreck. And if you can't afford $5000 a year in long-term care insurance, you certainly can't afford to pay for home health care, home modifications, physical therapists and skilled nursing care for the next 30 years if you were permanently disabled in that wreck to the point you needed long-term care.
So let's revisit... Cash flow is your life blood in retirement. It is what pays the bills. Not your net worth. Not the number on the top of your statement.
In retirement, the only thing that matters, (except to your heirs), is the money coming into your account that is available to sustain your lifestyle. Without it, you die. On the other hand, so long as you have plenty of it, you can easily and comfortably maintain your standard of living indefinitely into the future.
Cash smooths out cash flow. The more uncertain your cash flow, the more cash you need to have. If you can live very comfortably on Social Security, Medicare and your pension, your cash requirements will be smaller. If you retire at 45, you are still carrying a mortgage, a pile of debt and all of your cash flow comes from your investment portfolio, you cash needs will be much, much bigger.
Finally, insurance protects your assets, your sources of cash flow and lifestyle, from catastrophic loss. If you can't afford to lose it or pay it, even if the chances of a loss occurring are very small, it must be insured.
So, back to my original question... you are tired of working and want to know if you can retire. How do you know? Simple. The question is do I have enough?
Enough cash flow?Enough cash?Enough insurance?
If you are short in one or all of these three areas, put your nose to the grindstone and create a plan to get where you need to be. The good news is you don't have a million things to focus on - there are only three: cash flow, cash and insurance. With enough of these three, you can take care of everything else.
Provided the answer is yes, you have plenty of all three, well then... you go find your sweetie and ride off into the sunset!
Happy trails!

The intent of this article is to help expand your financial education. Although the information included may be relevant to your particular situation, it is not meant to be personalized advice. When it comes to investing, insurance and financial planning, it is important to speak to a professional and get advice that is tailored to your unique, individual situation. All investments involve risk including possible loss of principal. Investment objectives, risks and other information are contained in the Snider Investment Method Owner's Manual; read and consider them carefully before investing. More information can be found on our website or by calling 1-888-6SNIDER. Past performance is not indicative of future results.

Kim Snider has helped thousands learn sound financial management practices. Her firm, Snider Advisors, was built on the belief that a good financial education is the best way to avoid being taken advantage of. That's why we combine financial education with other products and services such as asset management, medicare supplement insurance, long-term care insurance, life insurance, disability insurance and retirement planning.

The pursuit and attainment of prosperity, in all its forms, will require certain things from you - all important, all necessary, and all having a proper place in the overall project. These requirements are:-

We will only be looking at vision in this article - YOUR vision - because unless you have at least some, you can't succeed in your pursuit of prosperity. You cannot attain your desires for prosperity with just desire.

Desire can birth vision, but desire is not vision. Unless you are able to see forward into the future and see where you wish to be at different stages of your life, you won't be able to set the targets you need to achieve. The problem, of course, is that if you don't know what you want to achieve, you won't be able to work out what you will have to do to get there.

The fact is that every one of us is most likely to only achieve what we can 'see' or, in other words, the extent of our vision. There is a well-known saying that says, "What the mind can conceive, it can achieve." You see, nothing can be achieved unless it can be seen, but the opposite is true, also; if you can't see it, it is highly unlikely that you will ever achieve it. There is good news, however - vision can grow, so as long as you have some to start with, and get the right help and teaching, your vision will grow as large as you want it to.

So, to get you started, some of the things you could think about in regard to your vision for the future:-

We can break it down into time zones - what do you want to have money for over the next 5, 10, 20, 30, or more years? Things such as -

One very important aspect of your vision - and your ultimate success - is your mindset; the way you think. Prosperous people think quite differently to, and often apparently contradictory to, the way the average man in the street thinks. Does that last sentence mean that, because you may consider yourself to be an average thinker now, you can't be wildly successful and incredibly prosperous? No! The very fact that you are reading this article confirms that you are wanting to improve your lifestyle, so you know already that even at this point in time, you have within you at least greatness in embryonic form. The choice is yours; you can breathe life into it, or you can go on as you are now.

When you have thought about what you want for the future - as far as you are able at this point in time - you need to find someone who can help you make your vision a reality; someone who can give you the knowledge you need and assist you to work out your plan of action.

We are currently experiencing a time during which the greatest transfer of wealth is occurring. The middle class is shrinking and may well disappear altogether. When it is finished and the dust has settled, where will you be?

For more information on how you can protect your assets and become one of the wealth builders in the 'new economy' - follow the link.

So, here it is, the big 'R'. You've spent a lifetime working, setting monies aside for investment after retirement. Now you're here! What to do? Most likely, your investment after retirement will consist of a pension (?), 401(K), or IRA and Social Security. Statistics say that the average savings in a retirement plan is $100,000.

After you've figured out your expenses, down sizing, making changes, you must figure income including a part time job if necessary. Once you have all of the particulars figured out you can give attention to how you are going to manage your investment after retirement.

Two of the main components of investing after retirement is to be conservative and use your funds in a tax advantage way. Too many retirees get foiled into thinking that they can invest in investments that promise high returns usually in a short period of time. Can you say Bernie Madoff? We have heard the saying, "if it's too good to be true, is usually is". We can't let greed be our guide.

Look for investment after retirement that will be relatively stable such as bonds, c.d., money market accounts and annuities. These are not sexy but will keep you safe. Remember, each of them has their own definitions. It's up to you to see what fits your risk tolerance. These should not have risks associated with them.

As far as taxes are concerned when investing after retirement, use funds that have the lowest tax liability. This strategy allows you to maintain your principal balance at as high a level as possible because the more taxes taken out of your withdrawals, the more principal you will have to withdraw to meet your expenses.

First investment after retirement is to withdraw any monies from a non retirement savings account. You've already paid taxes on these funds, so withdrawals will not cost you anything. Once these are depleted, go to your 401(K) or IRA. The best way to do this is to roll these funds into an annuity and start receiving a monthly income. You will enjoy a safe monthly income with guaranteed income while investing after retirement.

Remember, investments after retirement are probably more important to you than ever before. Consult a financial specialist, tax attorney.

Why would one want to invest in real estate? All realtors will tell you: appreciation, cash flow and depreciation. Undoubtedly, over time, real properties will again rise in value. Even with the pounding that prices have taken, over the past 10 years (as August 2010), residential properties, on average (Case Shiller/SP 10 City data), outperformed the S&P 500 +47.3% for real estate, -30.9% for stocks! If you are saving for retirement, doesn't it make sense to diversify using investment properties?

If you have though of "downsizing" at or prior to retirement, consider the purchase of your retirement home now. After a professional adviser "crunches" the numbers, you might be amazed to see that buying a second home that can be rented can very well fit into your budget. In addition to rental income that you could receive, rental real estate also benefits from depreciation. This is a phantom expense that can turn a situation that is profitable from a cash flow perspective into a loss for tax purposes.

If you file jointly and your Adjusted Gross Income (AGI) is $100,000 or less, you may be able to write off up to $25,000 of your real estate losses against your income. That's a $6,250 reduction in taxes for those in the 25% tax bracket.

When you are ready to downsize, there could be great news for you. Unless current tax laws change, you may be able to sell your current residence and receive a tax exemption on up to $500,000 on the capital gains you realize. With that money, you can probably have enough to pay off the existing mortgage on the rental and move in to it. You might even have enough extra to provide you with extra income for the rest of your life.

One of the keys to success in the real estate market is understanding how the tax laws work in your favor. With proper planning, your cash flows can be managed and taxes reduced, making your purchases affordable.

Always be sure to check with your professional tax adviser before entering into complex investment transactions and tax laws are continually changing.

Gary Lewis' ideas incorporate more than 30 years working with investments including 20 years experience in the derivatives industry and 10 years as a fee-only comprehensive financial planner. He specializes in designing portfolios that meet the client's required rate of return with a minimum level of volatility. You can read his writings on financial markets at Asset Design Center.