Planning Now for Later - KCBD NewsChannel 11 Lubbock


Planning Now for Later

He planned to retire last year to pursue his passion for songwriting, but the sluggish economy changed Drew James's plans. In 1981, he was one of the first to participate in his company's 401k plan. James says, "It really is amazing that if someone would have told me back in 1981 how much money I would have been able to generate out of that 401k, I would have thought they were out of their minds." But no one warned James how much he could lose. James lost too much to retire completely. So now the 52 year old is working part time and writing songs on the side.

Whether you're 52 or 25, it's time to re-think your retirement plans. Financial advisors say you must first forget how high your 401-k funds used to be worth. Bob Bingham explains, "You want as an investor to always be in the present and your portfolio is what it is today,not what it was a year ago."

Your second step is to figure out where you stand. Bingham suggests, "Calculate what percentage of your assets are in stock, what are in bonds, and what percentage are in the sub classes for example foreign stocks and small company stocks."

Next, you must re-balance the stock and bond funds that already exist in your portfolio. This should be done every six months to a year. Bingham says, "Every time you rebalance, you will be following that old investment adage, sell high and buy low."

There are there general model portfolios to follow based on how many years you have left before retirement. If you're within five years of retirement, you'll need a less risky plan of about 60 % bonds and 40 % stocks. If you're five to 15 years from retirement, you'll want to reverse those numbers for moderate growth plan.

If you're more than 15 years from retirement you can go for an aggressive growth plan. This means set aside 80% for stocks and only 20 % for bonds. You also need to make sure you read your company's 401 k plan and gear it toward your needs.

For NewsChannel 11's Consumer Connection, I'm Sharon Maines.

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