Mayfield Village Program Addresses Retirement Planning

Planning for retirement isn't just about investing money, but it also requires protecting your savings, Michael Douglas, a licensed agent with New York Life, told audience members at a program at the Mayfield Village Community Room.

He said people talk about stocks and profits because that's more interesting. "It's more fun to talk about making money," he said. However, retirement planning involves figuring out your basic expenses and creating a strategy that will not jeopardize money needed to pay bills.

"Know your basic expenses and cover these," Douglas said. "Whatever's left, that's what you invest in the market."

One recommended strategy is to divide investments according to your age. If you're 70 years old, 70 percent of your assets should be in low-risk investments and the other 30 percent in stocks and riskier ventures. If the value of stocks go up, you would shift more money into low-risk investments and if your stocks lose money, more money is shifted to keep the same overall percentage balance.

"It takes emotion out. You want to have a portfolio that reallocates itself at least every year, if not quarterly," Douglas said. "It forces us to buy low and sell high. You can't do it unless you have a strategy that's unemotional."

With current life expectancies, people can expect to be living 26 years off of their retirement incomes, Douglas said. That means they should plan to spend about 4 percent of their retirement savings per year.

He encouraged audience members to grow money in tax-deferred investments. If you double an initial $1 investment every year for 20 years, you wind up with $1million in tax-deferred income or $51,000 if you're paying a 28 percent federal tax rate.

"It makes a dramatic difference," Douglas said.

Ruth Petche said she attended the program because she wasn't sure if an annuity purchased five years ago was a good idea.

"It was very interesting," she said. "I was concerned about the annuity. Is it a good idea? I don't know for sure. I do need to find out."