Preparing for Retirement

Retirement is one of life's major turning points, and an intensely personal one. Increasing numbers of financially successful people are retiring early, before age 65. Others feel 65 is too soon. Many retirees move on to new careers--one senior executive out of three goes back to work.

Yet however you define it, when you say, "I'm preparing for retirement," you're stating a definite economic goal: from here on, you're going to be financially independent for life.

You may or may not start a new career or go back to school. But whatever you do, you will do it by choice, not because necessity is nipping at your heels.

Many of our trust and investment customers first come to us when they are about to retire. The following information is the essence of what we've learned from working with them.

Personal Investments

Retirement means that your investment goals will shift: less emphasis on capital growth, more concern with capital preservation and the protection of your purchasing power. The sooner you reach tentative decisions on how you want to allocate your invested funds when you retire, the more opportunity you will have to make portfolio adjustments in an advantageous manner.

For instance, you'll be able to pick and choose the time for selling stocks that are too volatile for your retirement portfolio. This flexibility may allow you to take advantage of favorable market conditions.

Staying Flexible

When you retire, it's wise to keep your options open. Retirement horror stories are often the result of decisions made in haste, repented at leisure.

The choice of a place to live, for example. The fact that your best friends are blissfully happy after moving to a distant retirement haven is no guarantee that you will be. If you're considering a move, try to spend some time in the new location before you burn your bridges.


By the standards of earlier generations, many people are retiring in relative affluence. That makes them the prime target of sales pitches for all types of investment products and programs--good, not so good and terrible. As too many retired men and women have learned the expensive way, it's easy to sign up for complex investment packages that purport to offer exceptional yields or special tax benefits. Often, however, it's not so easy to get one's money out again.

At retirement, there's no substitute for investigating before you invest. Don't give up the privilege of changing your mind without an extraordinarily good reason.

Don't underestimate the consequences of even "moderate" inflation either.

If inflation averages just 4% yearly, you'll need over $14,000 of investment income in your tenth year of retirement in order to maintain the same purchasing power that $10,000 of investment income gave you in the first year. That's why top-quality stocks with a record of paying generous and growing dividends will deserve a place in your retirement portfolio.

Estate Planning

Retirement often calls for new wills or trust arrangements. Don't be surprised if your estate adds up to more than the amount that is allowed to pass free of federal estate tax.

By making lifetime gifts--setting up trusts for the grandchildren, for instance--potential estate tax liabilities can be reduced. However, lifetime gifts must be irrevocable in order to be tax effective. Family gifts are a great idea if you're sure that you'll never need the funds that you give away.

Retirement Security with a Flexible Trust

Often our retirement-age customers find that they don't need to do anything irrevocable in order to shield their estates from tax. Our most comprehensive asset-management program, a revocable trust, combines professional investment supervision with important estate planning features.

With this highly flexible type of personal trust, retired men and women are maintaining their financial security without tying up their money, and without locking themselves into an investment program that cannot be changed as the years go by.

Here's a brief overview:

As your trustee, we provide full management of your invested funds, geared to your personal goals and circumstances. Or, if you prefer, we submit investment recommendations for your approval.

As trustee, we also provide safekeeping for securities, maintain the records needed for tax and investment purposes, redeem called or matured bonds, and take care of other routine portfolio chores.

In addition, you can authorize us to manage your personal finances if ever you should become incapacitated.

You may revise or expand the directions you give us--the terms of the trust--whenever you wish. You're free to add money, make withdrawals, or cancel the trust.

Also, a revocable trust offers significant estate planning advantages. You can name successor beneficiaries to receive your trust fund at your death or instruct us to continue the trust for their education and support. The trust assets need not be subjected to probate; thus delays are avoided, and estate settlement costs are usually reduced.

Although assets placed in a revocable trust remain part of a person's estate for tax purposes, often these assets can be shielded from taxation at the later death of a spouse, children, or other beneficiaries.

For example, when husband and wife leave simple wills, everything over an "exclusion amount" becomes subject to tax when passing from the survivor to their children or other heirs. With trust-based estate planning, they can double the amount that avoids tax at the survivor's death, saving the family $100,000, $200,000, or more.

If you have not investigated the advantages of a revocable trust, put it high on your list of retirement options worth exploring.

Our Experience is at Your Service

We've worked with a broad spectrum of business people and professionals to solve the problems--and seize the opportunities--that arise as retirement approaches. Whether you're retiring early, retiring late, or regrouping to start a new career, we will propose realistic strategies, geared to your personal requirements. Call on us!

Investments not FDIC insured - May lose value - No bank guarantee