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Retirees: Your Next Move

For retirees, this week’s slide has been particularly cruel: After a record rally in October that put many nest eggs back in the black, those portfolios are once again getting punctured.

Unfortunately, most advisers predict the wild swings that began in August to continue through the end of the year, thanks to the debt drama playing out in Europe and plenty of economic headwinds at home. “This volatility may be the new normal,” says Rick Kahler, president of Kahler Financial Group in Rapid City, S. Dak.

Of course, such turbulence can be particularly troubling for retired investors, who are living on a fixed income. And unlike their younger peers, they have much less time to recover from any market losses. Fortunately, financial advisers say there are steps these older investors can take to minimize the risks to their portfolios and, perhaps most importantly, stay calm.

Keep cash on hand

With all of the volatility, most advisers recommend keeping at least some cash on hand. “Take two to five years of cash flow and put it into a money market account or something similar,” says Kahler.  “This way, you don’t have to take withdrawals from your nest egg in a down market.”  Laura Scharr-Bykowsky, a principal at Columbia, South Carolina-based advisory firm Ascend Financial Planning recommends that retirees keep five years of net living expenses in bank accounts as well as short-term bonds to help guarantee principal regardless of what happens in the market over the next few years.

Add guaranteed-income or safer investments to your portfolio

With all the ups and downs in the market, retirees need to make sure that their asset allocation is in line with their age and risk tolerance,

Kahler says. For pre-retirees and younger retirees, Scharr-Bykowsky recommends moving some cash into individual bonds where principal is protected and a certain rate of return is guaranteed. Lance Reid Scott, president of Bay Harbor Wealth Management in Baltimore says it may also be time to consider an annuity. “These aren’t for everyone,” he says.  “Look at the fees and terms to make sure it makes sense for you.” But they do provide guaranteed income, which is appealing in this market, he says.

Withdraw less

Before the market crisis of 2008, many financial advisers recommended that retirees could withdraw up to around 7% per year from their nest egg. Today,  many pros are recommending as little as 3% or 4%, says Kahler.  “Don’t withdraw more than 5%,” he adds – or you’ll risk running out of money as you age.

Think long-term

“First, you need to have a long-term strategy with your adviser that you’re comfortable with,” says Scott.  Once you have that, stick to it, advisors say. “We’re doing what we’ve always done — thinking long-term,” says Kahler.  The reason: People who try to time the markets typically lose out, he says.  Bottom line: Don’t panic even when the markets take a swing.

– AnnaMaria Andriotis contributed to this article.


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    • By WebOsPublisher

      [LASC] ICO Summer Sprint O Meet Information and Schedule
      [LASC] ICO Summer Sprint O Meet Information and Schedule
      Steve Ames
      steve at energistic.com
      Tue Jun 7 19:19:02 EST 2005
      Previous message: [LASC] Orienteering at Camp Cullom
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      —– Original Message —–
      From: "Indiana Crossroads Orienteering" <indyo at indyo.org>
      > ICO Members and others interested in orienteering,
      > Here’s some information describing ICO’s summer Sprint Orienteering
      > schedule (also available on our website, indyo.org).
      > To help promote the Sprint format (which is now recognized by the IOF),
      > and to bring more variety and friendly competition to the summer schedule,
      > ICO will host five sprint orienteering events this summer.
      > Points earned in this series will count in Peter Gagarin’s 2005 Sprint
      > Series. In addition, the top three cumulative scores in the five ICO
      > events will get awards after the last event.
      > 2005 ICO Summer Sprint Series
      > The Sprints
      > Saturday, June 11th: Camp George Cullom
      > Saturday, July 9th: Camp Bear Creek
      > Sunday, August 7th: Marott Park (NEW MAP!)
      > Sunday, August 21st: Eagle Creek East (2 sprints, prologue/chase format)
      > All these events will also include standard white/yellow courses. Longer
      > courses are at the discretion of the individual event directors.
      > Scoring and Awards
      > In order to integrate into Peter Gagarin’s 2005 Sprint Series, the ICO
      > series will adopt the same scoring system, as follows:
      > The winner of a sprint will receive 30 points. The second-place finisher
      > will get 29 points, third place will get 28 points, all the way down to
      > the 30th finisher, who will get o­ne point. There are separate points
      > lists for men and women. There are no age-specific points lists.
      > The scores from all five events will be combined, and the top three series
      > finishers (in each gender) will get awards at the end of the final event
      > at Eagle Creek East. Clearly, this kind of scoring system favors those who
      > are able to run in all the sprints!
      > Peter Gagarin’s 2005 US Sprint Series
      > The 2005 US Sprint Series is a fun, grass-roots effort to promote the
      > sprint format in the US by encouraging clubs around the country to host
      > sprint events and award points. The sprint rankings are maintained o­n the
      > series web page, and an unofficial sprint finals will be held o­n
      > September 10th at Pawtuckaway State Park in New Hampshire.
      > See all the info at the series web page:
      > users.crocker.com/~pg/team/sprintschedule.html
      > About The Sprint Format
      > Sprint orienteering tests the competitors’ ability to read and translate
      > the map in complex environments, and to plan and carry out route choices
      > running at high speed. The controls themselves are technically easy, but a
      > properly-designed sprint course will challenge the runner with difficult
      > route choice, requiring high concentration.
      > Sprint races are held o­n 1:4000 or 1:5000 maps. The start interval is
      > o­ne minute. Winning times (for senior elites) should be 12-15 minutes.
      > The sprint format is spectator-friendly, and can be set in very runnable
      > parks, streets or forest. It is a fast, visible, easy-to-understand
      > format, allowing orienteering to be staged within areas of significant
      > population.
      > PLEASE NOTE: ICO’s goal with this series is to offer exposure to the
      > sprint format, not to alienate those of you who are not runners. Everyone
      > is encouraged to participate in all the sprints, whether you run or hike.
      > This is meant to be a fun and educational series for all!
      > Prologue/Chase Format
      > The final two sprints (at Eagle Creek East o­n 8/21) will feature the
      > prologue/chase format. This format combines the convenience of staggered
      > starts with the excitement of head-to-head competition.
      > The first sprint (the prologue) will feature randomized (first come, first
      > served) starts at o­ne-minute intervals (as turnout allows). The second
      > sprint (the chase) will feature assigned start times which are seeded
      > using the results of the prologue. So the winner of the prologue starts
      > first in the chase. The second-place finisher in the prologue starts
      > second in the chase, and follows the first-place runner by the same amount
      > of time that that their prologue finish times differed.
      > This means that the competition in the chase is head-to-head, with
      > everyone o­n the same clock. The first person across the finish line in
      > the chase wins the combined event.
      > Example: The top three finishers in the prologue are Bob (14:30), Mary
      > (15:00), and John (16:30). The chase starts at noon. That means that Bob
      > starts the chase at noon, Mary starts at 12:00:30, and John starts at
      > 12:02:00.
      > Remember to check the ICO website, indyo.org, for schedule updates and
      > more information concerning the individual meets… We hope to see
      > everyone out orienteering this summer!
      Previous message: [LASC] Orienteering at Camp Cullom
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    • It is unfair of the IRS rules that if I earn, say $10,000 in profit I have to declare it on my taxes. But if I loose, say $10,000 I cannot get the entire amount deducted when I file my taxes. They only allow $3,000 per year until the $10,000 loss is used up. To me that is unfair practice and should be changed and not 15 years from now when I’ll be in another dimension!

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