ALAN ABRAMS
Special to the Jewish News

I

f you are planning for retire-
ment or have recently retired,
the volatility of the stock mar-
ket may have raised some ques-
tions as to how best plan and invest
for your retirement.
"This is serious money," cautions
David A. Sonnenschein, Senior -Vice
President - Investments for
PaineWebber in Birmingham. "People
who are 55 years old are caught up in
their careers. They are still bringing
home a paycheck. They are not men-
tally prepared for retirement and are
not planning in advance. They need to
start the planning process while they
have a chance to change the outcome
of the story," he said.
Financial advisor Sonnenschein said
planning for retirement involves
changing your expectations about how
much money you are going to spend.
If you are living on your salary of
$100,000 a year, you can't say you are
only going to spend $60,000.
Sonnenschein said that if you underes-
timate how much you need to main-
tain your lifestyle, you , won't make it
because your money won't last. You
will either have to remain in the work-
force longer, consider putting off
retirement, or start earlier to/accumu-
late more assets before you retire.
"Between the ages of 50 to 60 is
when people normally start thinking
seriously about investing for retire-
ment," said Sonnenschein. "People
who start to invest in IRA's and
401(k)'s in their 30's will see that
money grow dramatically. But the cru-
cial time is when you are between 40
and 50, an age bracket in which peo-
ple are not saving their money. But
even if you wait until you are 55, you

Franklin Gittleson, left, of Bloomfield Hills watches as David Sonnenschein
looks at his por t folio.

can still change the impact. If you
start then to save an extra $10,000 to
$20,000 a year, it will only amount to
about a $100,000 difference," he said.
Investment income is a much bigger
percentage of the total picture than it
was in the 1980s when people thought
more about retiring off their pensions,
Social Security, rental income, or even
land contracts. Fixed pensions have
become far less prevalent with the
advent of 401(k) plans. People have
built up mere personal assets through
investments, which have become a
greater part of their income. They
look at their lifestyle requirements and
now have to realize that their reason _ -
able lifetime may extend to the age of
90 and beyond.
Sonnenschein said there is also the
issue of taking care of a surviving
spouse and with it the realization that
a pension may be cut in half. If it is a
younger spouse from a second mar-
riage, the issue becomes even more
paramount.
"When people are getting ready to
retire, they always have a couple of
questions. One is 'Have I accumulated
enough to retire without working?'
And the other is 'Will I make a finan-
cial mistake from which I can never
recover?' If you are leaving employ-
ment in which you had your medical
(insurance) paid for, how are you
going to acquire new coverage? And
what about long-term care? How are
you going to be able to afford a pri-
vate duty nurse without having to put
a wall around your assets? When you
leave an organization in which you
had group disability, group life insur-
ance and dental care, you have to eval-
uate what the cost of all of that is and
then replace it," cautions Norm
Pappa-s of the Enterprise Group in
Southfield.

Retirement

Home Run

Professional advice and long-term plans are the keys.

4IN

1/26
2001

