Retirement or starting a new career

Would you like a response to a financial question? Send your question to Doug Horn, 115 W. Broadway, Maryville, TN 37801. Be sure to mark your envelope Money Matters. Doug Horn, CFP, is an area financial planner with more than 24 years financial experience and founder of Quality Financial Concepts, located in downtown Maryville on Broadway.

For the last three weeks I have been covering several ways to protect income and lifestyle. For some, this could be similar to reviewing fire insurance after the barn has already gone up in ashes. The equity markets’ drop during 2008 was largely unexpected, and clearly severe. The impact on investors and our economy is still being measured.

A recent article by Donna Mitchell points out that almost 9.5 million retired Americans are considering going back to work. With current job markets already weak, the addition of these individuals back into our workforce will be challenging and may negatively impact statistics that analyst and politician alike follow. The unemployment rate is expected to continue to climb through the end of this year and most likely the first and perhaps second quarters of 2010. Should these presently retired workers re-enter the workforce, this may cause the unemployment rate to tic up more than expected.

I am certain many of these retirees reduced their withdrawals from their personal investments in the hopes the account values would recover more quickly. Even though the markets are up since the November 2008 lows, the momentum may be shifting once again. Most analysts expect the investment markets to continue to incur many rallies and corrections as it recovers the value lost during 2008. It should not be surprising to see some of the future corrections as well as rallies to be significant percentage moves.

Those retirees who have seen their investment values drop significantly are clearly searching for solutions to maintain their lifestyles. As Ms. Mitchell reported, many are considering new full and part-time jobs. This move should not be made without careful consideration. Those taking Social Security should meet with the administration to determine the potential impact new wages may have on benefit amounts and potential reductions. In the event the additional wages does not impact the benefit amount, the additional income may cause a portion of the benefit to be subject to income taxes. And for those nearing 70 ½ they will be facing the mandatory withdrawals from retirement plans. This income in addition to new wages from going back to work may increase the overall income tax liability thus limiting the benefits from the new job.

Managing investments during the next several years will also be challenging. As the workhorse of our economy, the American Consumer is on a financial diet, the recovery in equity values will be slower to arrive. As with the last eight months, there have been two significant rallies. These rallies provided opportunities for many investors to gain ground on the values previously lost. This will continue to be the case as the markets work through the recovery and the new legislation that is forth coming.

For help with managing investments contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our website, There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other tools all available for free.

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