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Colleen's Corner

Asset Allocation

Often financial "experts" make asset allocation difficult to understand. My goal in this series of articles is for you to understand asset allocation thoroughly, in an easy to understand format.
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How to Make Your Retirement Assessment

Colleen Mulder-Seward, MBA
Retirement Calculator, Inc.
How to Make Your Retirement Assessment

To ensure a comfortable retirement, you must make a retirement assessment of your finances.   The steps to assessing your retirement finances can be remarkably simple.  These steps include checking your - level of debt, financial education, ideal asset allocation mix and progress.

Level of Debt

Most financial experts say you need at least 75 percent of your pre-retirement income to live comfortably in retirement.  This assumes that you do not have any debt obligations - the big three being mortgage, credit card and vehicle loans.  By eliminating debt in your retirement, you will only have to pay for essentials and the money you would have used to pay toward debt, can be used for nonessential items that make retirement so rewarding - like travel.  

If you plan to retire and still have debt obligations, then you must budget for the needed retirement income to cover these additional expenses.  Instead of the recommended minimum of 75 percent of your pre-retirement income to live comfortably in retirement, you will need 100 percent.  Want to travel extensively too? Well, then you will need 110 to 120 percent of your pre-retirement income to make this a reality. 

Financial Education

A FREE subscription to the Retirement Intelligence Information Services newsletter provides investment education in easy to understand terms, to help you, the individual investor.  Providing intelligent retirement information is their passion. Through the Retirement Intelligence Information Services newsletter, you will become informed and empowered to take over control of your investments. 

Ideal Asset Allocation Mix

Asset allocation of yesteryear used to be simple.  The formula was to subtract your age from 100.  This resulted in the percentage of your portfolio you should have invested in stocks.  For example: a 65-year-old would have 35% in stocks and 65% in bonds and cash.  But, due to longer life expectancies, you run the risk that your investments will not grow fast enough to last your lifetime, when following this formula. 

In order to find your ideal mix, complete the short questionnaires located at  The questionnaire will result in an asset allocation strategy that should suit your individual needs.  The example to the right is one possible result from the completing the questionnaire. 

Once you have your ideal mix identified, you can plug these percentages into the Retirement Calculator Version 3.0.  This will help to identify if there is any shortfall with your current plan. If there is a shortfall, you can plan to work longer, take a smaller annual withdrawal amount and/or increase your savings rate.  Again, you can plug these "what if" scenarios into the retirement calculator until you no longer have an investment shortfall.  Your retirement assessment is complete, for now.


Just because you have finished your retirement assessment, does not mean you will not have to check your progress for the rest of your life.  You should make a retirement assessment after each life event (i.e. marriage, divorce, birth of a child, retirement, etc.) or at least every five years.  Again, through the use of the Retirement Calculator Version 3.0, you can view your retirement savings balance and plan your withdrawals for each year until the end of your retirement.  The results of your input assumptions are revealed instantly.

How do I keep up-to-date on the latest news impacting my retirement?

To keep informed about retirement topics, try a FREE membership to Retirement Intelligence Information Services. At no cost to join, you will receive a bi-monthly newsletter full of financial information to inform and empower you to have a successful retirement. As an added bonus, will include the Retirement Calculator Software Version 2.0 (a $24.95 value seen live on CBS TV) for FREE.

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