BY MELINDA WILLIAMS
Clipper Staff Writer
BOUNTIFUL – “People in their 50s and 60s absolutely need a (financial retirement) plan. So many think, ‘I can do this by myself,’” a local financial planning consultant said.
Alan Russel Hodgson, with Advanced Retirement Strategies, works with people over 50 in designing retirement plans that will see them through their life.
“I help people accumulate assets and then determine how to wisely spend money for their entire lifetime,” he said.
By their mid-50s people generally begin turning their thoughts towards retirement, Hodgson said.
He recommends that five years before people plan to quit working they look at their retirement income, including Social Security, pension and savings.
It’s too late, he said, if a person planning to take early Social Security waits until they’re 62 to think about those decisions.
“Five years in front of your retirement age you should consider what your (retirement) strategy is,” Hodgson said, and design something that protects your property.
Today, people in their 60s have a 50 percent chance of living into their 90s, Hodgson said.
“That’s almost 30 years of making your money work for you,” he said.
Those approaching retirement often don’t figure inflation or taxes into the equation, Hodgson said
“Your standard of living in retirement is cut in half,” he said. “If you think you can retire on a $50,000 a year income, by time you’re in your mid-80s, it will only buy $25,000 worth of goods.”
As long as you continue working, your wages increase, but in retirement that is not an option, he said.
“There are four or five significant factors you have to look at in your 50s or 60s Call it the alligator that can bite you,” Hodgson said.
Inflation tops Hodgson’s list.
“Your money’s worth less very year,” he said.
Next, is health care.
“It’s a huge concern in retirement,” he said. “One month in the hospital can cost $100,000, without health insurance.”
Then there’s taxes, that can go up or down.
And finally there’s what Hodgson called the sequence of returns in the financial market.
He explained this by recalling the stock market crash of 2008, when the market went down 35 percent. The following year it was back up 30 percent, he said.
“If the stock market goes down by 30 percent the year I retire, that 30 percent is much more significant than if it happened some years into my retirement,” Hodgson said.
“People don’t understand that if they lose 50 percent of their income, it takes 100 percent growth to get even.”
He suggests that whether you use a financial planner such as he is, or do something online, that everyone over 50, contemplating retirement make a plan.