Dolf Dunn Wealth Management, LLCDolf Dunn, CPA/PFS,CFP®,CPWA®,CDFA

Private Wealth Manager11330 Vanstory Drive

Suite 101Huntersville, NC 28078

704-897-0482dolf@dolfdunn.comwww.dolfdunn.com

A Retirement Income Roadmap for Women

May 13, 2013

More women are working and taking charge of theirown retirement planning than ever before. What doesretirement mean to you? Do you dream of traveling?Pursuing a hobby? Volunteering your time, or startinga new career or business? Simply enjoying more timewith your grandchildren? Whatever your goal, you'llneed a retirement income plan that's designed tosupport the retirement lifestyle that you envision, andminimize the risk that you'll outlive your savings.

When will you retire?Establishing a target age is important, because whenyou retire will significantly affect how much you needto save. For example, if you retire early at age 55 asopposed to waiting until age 67, you'll shorten thetime you have to accumulate funds by 12 years, andyou'll increase the number of years that you'll be livingoff of your retirement savings. Also consider:

• The longer you delay retirement, the longer youcan build up tax-deferred funds in your IRAs andemployer-sponsored plans like 401(k)s, or accruebenefits in a traditional pension plan if you're luckyenough to be covered by one.

• Medicare generally doesn't start until you're 65.Does your employer provide post-retirementmedical benefits? Are you eligible for the coverageif you retire early? Do you have health insurancecoverage through your spouse's employer? If not,you may have to look into COBRA or a privateindividual policy--which could be expensive.

• You can begin receiving your Social Securityretirement benefit as early as age 62. However,your benefit may be 25% to 30% less than if youwaited until full retirement age. Conversely, if youdelay retirement past full retirement age, you maybe able to increase your Social Security retirementbenefit.

• If you work part-time during retirement, you'll beearning money and relying less on your retirementsavings, leaving more of your savings to potentiallygrow for the future (and you may also have accessto affordable health care).

• If you're married, and you and your spouse areboth employed and nearing retirement age, thinkabout staggering your retirements. If one spouse isearning significantly more than the other, then itusually makes sense for that spouse to continue towork in order to maximize current income andease the financial transition into retirement.

How long will retirement last?We all hope to live to an old age, but a longer lifemeans that you'll have even more years of retirementto fund. The problem is particularly acute for women,who generally live longer than men. To guard againstthe risk of outliving your savings, you'll need toestimate your life expectancy. You can usegovernment statistics, life insurance tables, or lifeexpectancy calculators to get a reasonable estimateof how long you'll live. Experts base these estimateson your age, gender, race, health, lifestyle,occupation, and family history. But remember, theseare just estimates. There's no way to predict how longyou'll actually live, but with life expectancies on therise, it's probably best to assume you'll live longerthan you expect.

Project your retirement expensesOnce you know when your retirement will likely start,how long it may last, and the type of retirementlifestyle you want, it's time to estimate the amount ofmoney you'll need to make it all happen. One of thebiggest retirement planning mistakes you can make isto underestimate the amount you'll need to save bythe time you retire. It's often repeated that you'll need70% to 80% of your pre-retirement income after youretire. However, the problem with this approach is thatit doesn't account for your specific situation.

Focus on your actual expenses today and think aboutwhether they'll stay the same, increase, decrease, oreven disappear by the time you retire. While someexpenses may disappear, like a mortgage or costs forcommuting to and from work, other expenses, suchas health care and insurance, may increase as you

It's important for you tobe involved in theretirement incomeplanning process even ifyou're married. While youmay plan to be marriedforever, many womenend up single at somepoint in their lives due todivorce or death of aspouse.

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Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2013

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for anyindividual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performancereferenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The tax information provided is not intended to be a substitute for specific individualized tax planning advice. We suggest that you consult with aqualified tax advisor.

Securities offered through LPL Financial, Member FINRA/SIPC

age. If travel or hobby activities are going to be part ofyour retirement, be sure to factor in these costs aswell. And don't forget to take into account thepotential impact of inflation and taxes.

Identify your sources of incomeOnce you have an idea of your retirement incomeneeds, your next step is to assess how prepared you(or you and your spouse) are to meet those needs. Inother words, what sources of retirement income willbe available to you? Your employer may offer atraditional pension that will pay you monthly benefits.In addition, you can likely count on Social Security toprovide a portion of your retirement income. Othersources of retirement income may include a 401(k) orother retirement plan, IRAs, annuities, and otherinvestments. The amount of income you receive fromthose sources will depend on the amount you invest,the rate of investment return, and other factors.Finally, if you plan to work during retirement, yourearnings will be another source of income.

When you compare your projected expenses to youranticipated sources of retirement income, you mayfind that you won't have enough income to meet yourneeds and goals. Closing this difference, or "gap," isan important part of your retirement income plan. Ingeneral, if you face a shortfall, you'll have five options:save more now, delay retirement or work duringretirement, try to increase the earnings on yourretirement assets, find new sources of retirementincome, or plan to spend less during retirement.

Transitioning into retirementEven after that special day comes, you'll still havework to do. You'll need to carefully manage yourassets so that your retirement savings will last as longas you need them to.

• Review your portfolio regularly. Traditional wisdomholds that retirees should value the safety of theirprincipal above all else. For this reason, somepeople shift their investment portfolio to fixedincome investments, such as bonds and moneymarket accounts, as they enter retirement. Theproblem with this approach is that you'll effectivelylose purchasing power if the return on yourinvestments doesn't keep up with inflation. While itgenerally makes sense for your portfolio tobecome progressively more conservative as yougrow older, it may be wise to consider maintainingat least a portion in growth investments.

• Spend wisely. You want to be careful not to spendtoo much too soon. This can be a great temptation,particularly early in retirement. A good guideline isto make sure your annual withdrawal rate isn'tgreater than 4% to 6% of your portfolio. (Theappropriate percentage for you will depend on anumber of factors, including the length of yourpayout period and your portfolio's asset allocation.)Remember that if you whittle away your principaltoo quickly, you may not be able to earn enoughon the remaining principal to carry you through thelater years.

• Understand your retirement plan distributionoptions. Most pension plans pay benefits in theform of an annuity. If you're married, you generallymust choose between a higher retirement benefitthat ends when your spouse dies, or a smallerbenefit that continues in whole or in part to thesurviving spouse. A financial professional can helpyou with this difficult, but important, decision.

• Consider which assets to use first. For manyretirees, the answer is simple in theory: withdrawmoney from taxable accounts first, thentax-deferred accounts, and lastly, tax-freeaccounts. By using your tax-favored accounts lastand avoiding taxes as long as possible, you'll keepmore of your retirement dollars working for you.However, this approach isn't right for everyone.And don't forget to plan for required distributions.You must generally begin taking minimumdistributions from employer retirement plans andtraditional IRAs when you reach age 70½, whetheryou need them or not. Plan to spend these dollarsfirst in retirement.

• Consider purchasing an immediate annuity.Annuities are able to offer something unique--aguaranteed income stream for the rest of your lifeor for the combined lives of you and your spouse(although that guarantee is subject to theclaims-paying ability of the issuer). The obviousadvantage in the context of retirement incomeplanning is that you can use an annuity to lock in apredictable annual income stream, not subject toinvestment risk, that you can't outlive.

Unfortunately, there's no one-size-fits-all when itcomes to retirement income planning. A financialprofessional can review your circumstances, help yousort through your options, and help develop a planthat's right for you.

Women, on average, livefive years longer thanmen. (Source: TheNational Vital StatisticsReport, Volume 61,Number 6, October 2012.)

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