Retirement

Plan now to avoid the 'hurry-up offense' retirement scramble

For some nearing the end of their time in the workforce, it's a waking nightmare.

People caught in this predicament sometimes respond with a strategy known as "hurry-up offense" retirement. What this entails is scrambling like mad in the 11th hour to find something to live on

t's a less-than-ideal situation, but sometimes a pile of savings and investments resulting from shrewd planning simply doesn't exist.

The typical "hurry-up" strategy involves saving, reducing debt, and investing in volatile high-risk investments to catch up, says Buff Dormeier, a financial adviser and portfolio manager with Wells Fargo Advisors. He says the wisest strategy involves investing in stocks that pay dividends.

"Unlike with bonds, an investor can expect not only growth in capital but also growth in income through rising dividends," Dormeier says. "When stocks go down temporarily, the dividend yield typically goes up. However, over time, as stocks appreciate, typically the dividend yield stays the same." That is, the amount of the dividend grows along with the stock price.

Paul Essner, a partner at The Signature Group of Companies, has some other advice for the fretful near-retiree — weigh the consequences of breaking into what savings or investments you do have.

"Some savings programs, including annuities, have surrender charges for the first several years of the program. A surrender of the annuity could trigger an unexpected charge to the account, and a tax due." Essner also cautions against selling the beach house to create an instant nest egg. "If you have invested in a long-term asset, like real estate, often it requires maturing before it can be sold for profit."

While some advisers have good ideas for providing for retirement at the last minute, many more believe there's simply no substitute for financing retirement the old-fashioned way —by advance planning.

Nick Olesen, a private wealth manager for the Philadelphia Group, is one. "Although ["hurry-up offense" retirement] may work for a handful of people, I don't believe it is something that will work for most," he says.

"I recommend that at least 15 years before an investor's desired retirement age, they should sit down with an independent financial planner to get an unbiased analysis of where they stand in relation to their retirement goal," he says. Then, discuss ways to meet your goal and take action.

"Even if you saved into cash and earned nothing, over 15 years, you could save $54,000 by saving $300 per month. Now imagine trying to save that in just a year or two, like those who try the 'hurry-up offense' retirement. It just seems impractical and unnecessary."


more @ http://www.usatoday.com/money/story/2012-01-07/cnbc-hurry-up-offense-retirement/52417794/1