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Text Box: debt as possible before you retire so interest won’t be eating up your income after retirement. You may not want to pay off the mortgage or vacation property after reviewing the pros and cons. Also it may be wise to establish an equity line for cash management and other contingencies because it is easier to qualify prior to your actual retirement.

Text Box: Two to Four years out: Begin the preparation early. Tally up your expenses: You will need to estimate what it will cost you to live during retirement. Before you can project your future needs you must know how much your present lifestyle costs. Don’t necessarily accept that those costs will be lower just because you are retired. Track it all—food, clothing, shelter, vacations, hobbies, household expenses, recreational activities, and dining out. You may be surprised that the amounts in each category may change, but your total expense levels will remain as high or higher. Also, be honest with yourself. It is much more difficult to cut back than you may think. As a test for realism try changing your spending patterns a year or two before you retire. Remember when you retire your priorities will change and outlays for travel and health insurance may be greater than expected. Determine your home’s market value: You may want to consider downsizing your abode. You can use the balance to buy an annuity or otherwise invest for retirement income. The money tied up in your home can

Text Box: be a key element in your retirement plans. Remember, in our last newsletter we discovered that couples filing jointly who sell their home can pocket up to $500,000 of profit tax free. If you may plan to sell in a couple of years it would be good to contact me and discuss the steps and timing of such a move. Review your total portfolio allocations with a professional: How many assets are available in your calculations (e.g. pension fund, 401K, ESOP shares, options, insurance, personal savings, other investments, and real estate)? List all your assets and see what kind of growth and income you can expect each year. If you are comfortable with the growth and income to be generated from these assets—great! I would still advise some quality time be spent with a personal financial advisor. The purpose should be to ensure you set up the best possible portfolio addressing your planned retirement needs. Review your balance between IRA and regular savings, income vs. growth investments, high volatility vs. low volatility, and your diversification of investments. And remember, it is always good to get more than one opinion. Pay down debt: Eliminate as much

Text Box: inflation (est. 3%), In 5 years Roger should be clearing an additional $3,000 per year net cash flow. If the property appreciates at the same rate as inflation Roger will make another $10,000 each year in property value. If you are using an IRA or Roth account you may sell at any time. Any income or profit on sale will be tax free as an IRA investment within your retirement account.

Text Box: The booming real estate market is persuading people to buy houses to rent out and perhaps later move into to a suitable future retirement home. Cash flow plus future appreciation can be a powerful lure for even a small scale real estate investor. Owning a rental property can also give you more control over your investment, especially if you own it close to home. Here is a rental scenario: Roger buys a duplex for $315,000 near his present home. The duplex has a

Text Box: 600 sq ft single bedroom unit and a 1000 sq ft 2 bedroom unit. The mortgage, tax, insurance and minor “up keep” total approximately $1700 per month (with 30% down, 6% 30 yr fixed loan). Rental for the two Units is $1,700 per month: $700 for the 1bedroom, and $1,000 for the 2 bedroom. The mortgage is being paid off while rented, and rents currently offsetting expenses, will be increased each year at the rate of

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