Briefly Noted

    Nest Egg Survival: 8 Tips to Make Sure It Lasts

    If you are in retirement, how can you protect and draw from your nest egg in ways to see you all the way through retirement? Here is the latest advice from professional financial planners:

    1. Plan on living longer. Planners used to plan on clients living to age 85, but now have extended it 95 or 100. It doesn’t take that much more money in a portfolio to help pay for those additional years, but you do need to plan for it.

    2. Health worries trump longevity. Planners are putting increased emphasis on long-term care planning, including the purchase of long-term care insurance, so that retirees do not “outlive their money in ill health.”

    3. Withdraw conservatively. Recent research has indicated that retirees can “safely” withdraw a dollar amount based on 4% to 4.5% of the value of their portfolio at the beginning of retirement, with the withdrawals adjusted annually for inflation. Some planners feel that retirees can start out at a higher withdrawal rate, say 6%, but must be willing to reduce the rate if there is an extended stock market setback.

    4. Stocks remain important in retirement. Virtually every retirement portfolio study confirms the need to maintain a large portion of stocks in your retirement portfolio, to ensure real growth.

    5. Keep cash in the portfolio. More planners are recommending that clients keep three to five years in low-risk liquid assets—cash and short-term bonds—so that retirees won’t be forced to sell stocks during down markets for living expenses.

    6. Consider immediate annuities. Many planners are becoming fans of using immediate annuities for making distributions from nest eggs.

    7. Control spending. Planners are putting increased emphasis on smart budgeting during retirement, particularly for variable expenses such as vacations and new cars.

    8. Consider working part time. This will go a long way toward reducing the risk that your portfolio will run out of money.

    From the Financial Planning Association, the membership organization for the financial planning community, based in Denver, Colorado;

    Nest Egg Building: 5 Strategies
    1. Pay off high-cost consumer debt.

    2. Buy a home and pay off the mortgage before you retire.

    3. Participate in a work-related retirement program.

    4. Outside of work, save monthly through an automatic transfer from checking to savings.

    5. Earn up to 4% or more on many CDs or U.S. savings bonds.
    From America Saves (, a coalition of nonprofit, corporate, and government groups that sponsors literature and programs designed to help and encourage individuals to save and build wealth.

    Check Them Out: Futures Firms and Brokers

    The National Futures Association has a new brochure to help investors conduct on-line background checks of futures firms and brokers using its Background Affiliation Status Information Center, located on NFA’s Web site.

    The brochure lists the type of information available, describes how to conduct a search and provides additional education resources. You can download the brochure (Background Affiliation Status Information Center: An Information Resource for the Investing Public) from NFA’s Web site ( or request a hard copy of the brochure by calling NFA’s information center (800/621-3570).

    Background searches include current and historical registration information as well as disciplinary actions taken by NFA, the Commodity Futures Trading Commission (CFTC) and all of the U.S. futures exchanges. They are no cost to the user, and can be accessed at

    Equity REITs: Many Happy Returns

      Annualized Returns Thru 8/31/04 (%)
    1 Year 29.9 11.5 11.4 1.5
    5 Years 17.4 –2.1 6.4 –7.7
    10 Years 13.0 10.7 9.3 9.2
    20 Years 12.6 12.8 10.4 10.4

    FDIC Consumer News, Fall 2004.