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Seven Steps To a Successful Retirement: Society of Actuaries

There are several steps to take in order to prepare financially for retirement.

| BY Kent McDill

Almost anybody who works for a living gives some thought to a day when they won’t have to work for a living, and that dream, by necessity, includes proper financial preparation for retirement.

The Society of Actuaries has released a report that details the seven steps to a sound retirement entitled “Segmenting the Middle Market: Retirement Risks and Solutions Phase II Report.”

“Retirement financial planning requires a methodical approach that identifies and quantifies each important component that affects the asset accumulation, income management and product selection/investment decision processes," said report author Noel Abkemeier.

The report is aimed at Americans who have less than $100,000 already earmarked for retirement funds, but the steps can also be followed by those with greater retirement funds as well.

Quantify Assets and Net Worth

Basically, you can’t decide what you need until you decide what you have. The report states that it is necessary to place a value on everything you own, including your home. This part of the report also includes determining ways in which you can increase income, including possible revenue that can be earned from the home, either by selling, renting or taking out additional loans such as home equity or a second mortgage.

Quantify Risk Coverage

What do you have in ways of insurance, either for health, disability, life, auto or homeowners? There also has to be some consideration for long-term health care insurance.

Compare Expenditure Needs Against Anticipated Income

Figure out what you think you will have in terms of annual income when you stop working, either from retirement savings, pension, Social Security or other income streams. Determine your essential living expenses, including food and housing costs, and compare that to your anticipated income. This is where you will determine the quality of your retirement. A U.S. Money report indicates that a successful retirement plan must include an honest assessment of your retirement dreams.

Compare Amounts Needed in Retirement Against Total Assets

So you know how much you need annually, and you know how much income you anticipate. Compare those numbers and adjust accordingly. Since income cannot be greatly affected immediately, there might be a need to adjust your expenditure plans. This calculation will let you know when you are best set to actually retire.

Categorize Assets

Some assets are time-released; it is possible to wait until the funds are needed before accessing them. Therefore, it is necessary to determine what funds you will have when. Many insurance policies have rules regarding when the payments can be made.

Make Investment Decisions

If, after all the plus-and-minus work that has been done, you find you have discretionary income, that is money that can be used to create more money. The SOA report recommends that investments be made only in products that are suitable relative to risk tolerance, and the capacity of the portfolio to handle possible volatility.

Keep the Plan Current

If you are able to keep an eye on all of your accounts and investments, it is recommended that you do so regularly and frequently. If you are unable to do so, it is necessary to find an advisor who will be watchful of your funds, your outflow and your income. Then, you have to be watchful of your advisor to make sure that you are getting the most out of what you have.

“You need to tie everything together and go back to the start of the process every year,’’ Abkemeier wrote. “You want to enjoy retirement, but you don’t want to be at rest.”

About the Author

Kent McDill

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.