Retire by design, not default A little advance planning can make decisions easier For most people, the "age of retirement" is about 65. Some plan to leave the workforce earlier and others realize that they will stay a bit longer, but people generally calculate "early" or "late" from a milestone of about age 65. Unfortunately, this type of thinking encourages too many people to view retirement as a one-size-fits-all event — and that couldn't be further from the truth. Retirement is a highly personalized lifestyle change that requires careful attention and good decision-making skills. You'll be living on assets that you've accumulated during a lifetime of work, and those assets cannot be easily replaced if you make costly mistakes, so it pays to plan. Designing your retirement If you're about five years away from retirement, it may be time to do some specific thinking about what your life in retirement will look like and how you will use your personal savings and other income sources to fund it. After years of working, you'll have more free time, but you may also be at a very different financial place. Instead of focusing on accumulating assets, you'll be focused on using those assets wisely, in hope that they will last a lifetime. Every decision you make about your retirement lifestyle will affect your retirement assets, so each must be weighed against the other. Will you retire early? If you just cannot wait for more leisurely pursuits, your retirement plan may include leaving the workforce before age 65. If so, you may need an investment portfolio or other assets that can finance your monthly expenses. Your eligibility for Social Security benefi ts may also play a clear role. If you were born in 1960 or later, your full Social Security benefits are not available to you until age 67. You can claim benefits earlier but only at a permanently reduced level. If you leave the workforce at 55, you'll be retired for 12 years before you can collect full Social Security benefits. See Deciding when to take social security for more information. Likewise, you won't be eligible for Medicare for several years, so you may need to plan to pay full medical insurance premiums, as well. Then there are lifestyle choices. How will you use your time? If you plan to work part-time or start a small business, you may need to rely less on your accumulated investment portfolio. If you plan to travel or indulge in an expensive hobby, you may be tapping your nest egg at a higher rate. Even where you live must be part of your decision process. A Manhattan high rise, Broadway shows and five-star dining will likely require heavy monthly withdrawals. On the other hand, a modest home in a small town, gardening every afternoon and barbequing on the deck will cost much less. Which fits your style? Planning around question marks You must also consider factors over which you have no particular control. How long will you live? No, it won't be forever, but it could be 30 or 40 years after you retire. Do you have good genes? Do you exercise and eat right? Are you married? If so, you'll need to plan together and anticipate both life expectancies. Statistical analysis can provide ballpark numbers, but even these statistics are averages and don't apply to everyone. Beyond lifestyle factors, there are day-to-day investment considerations. If you have a pension plan, you'll need to calculate the monthly benefits it will provide. If you have a 401(k), you'll probably base many decisions on how much cash flow you can generate from those investments without running out of money. Do you know what rate of return you should use to estimate the annual income your portfolio might generate? If your anticipated budget and your anticipated annual income are mismatched, you need to know that before you leave your job. Armed with this knowledge, you'll make a more informed decision about the timing of your retirement. You may decide to delay retirement a few years to provide more time to put money away and let the assets you do have continue to grow. You could also decide to go ahead and retire, but work part time. After accumulating assets over a lifetime of hard work, you will spend those assets during your retirement in a uniquely personal way. You may decide to seek assistance in your planning. A qualified financial professional can help you match your investment portfolio to your goals, perhaps switching it from a growth-oriented plan to a cash-flow-generating one. Designing your retirement in advance can help you feel more in control of your future. If you need a referral to a financial professional, Russell can help. Please submit a request. Fund objectives, risks, charges, and expenses should be carefully considered before investing. A prospectus containing this and other important information can be obtained by calling (866) 676-7680 or by visiting this page on russell.com. Please read the prospectus carefully before investing. Copyright © Russell Investments 2007. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an as is basis without warranty. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Securities products and services offered through Russell Financial Services, Inc. (formerly Russell Fund Distributors, Inc.), member FINRA, part of Russell Investments. For information on the Financial Industry Regulatory Authority, go to www.finra.org. First used: May 2008 RFD 08-0291			RELATED Articles Affording Retirement Understanding Compounding   Choose a single LifePoints Fund to fit your risk tolerance and investing goals. Printer friendly version of this page Send feedback or comments Site Search

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