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Time for some financial <br />spring cleaning?

You may or may not engage in many of the typical activities of spring cleaning--de-cluttering the attic, reorganizing your closets, touching up paint, etc., but you can almost certainly benefit from "sprucing up" your financial situation.

Are there areas of your financial landscape that you might want to tidy up? Here are a few suggestions:

Clear your portfolio of "redundant" investments. Over time, you may have built a sizable investment portfolio.

But if you have too many investments that look alike, you may actually be hindering your progress toward your goals. After all, if you own a dozen stocks of companies in the same industry, they're all likely to be buffeted by the same economic forces.

Look for opportunities to replace some of these "redundancies" with different types of securities, taking into account your risk tolerance and time horizon.

Organize your financial records

If you're like those of us who file our taxes at the last minute, now is the perfect time to organize your financial records, because you've probably got them close at hand. And it's not just a matter of having your brokerage and 401(k) statements in nice, neat piles. Once you've got these documents together, you might see opportunities to consolidate some of your accounts. For example, you may have IRAs with different banks and financial services companies. By moving them all to one provider, and possibly rolling over an old 401(k) into an IRA, you could save some fees and reduce your paperwork but, more importantly, you may find that such a move actually helps you better manage your investments.

You'll know exactly what you're invested in, and it will be easier to follow a single investment strategy. Also, with all your IRAs in one place, it will be much easier for you to manage the required minimum distributions you must start taking when you turn 70 1/2. (These distributions are not required for Roth IRAs.)

Review your "systematic" investments

Many years ago, you might have started systematically moving money from your checking account into an investment. But perhaps the circumstances of your life have changed and this money could better be used elsewhere. Scrutinize your automatic investments to see if they still make sense for you.

Check your beneficiaries

Beneficiary designations on financial documents -- insurance policies, IRAs, 401(k)s, etc. -- are extremely important, because they supersede even the instructions in your will.

Over time, your family situation may have changed, through death, divorce, remarriage or the birth of new children, so you should periodically review all your beneficiary designations.

Examine your insurance coverage

When you have a young family, you need a certain amount of life insurance coverage to provide for some major expenses -- such as your mortgage, college for your kids, perhaps some retirement funds for your spouse. But when your children have grown, your mortgage is paid and your spouse has decades' worth of retirement savings, your insurance needs may change considerably. At the same time, you may find other uses for insurance. Take some time and review your insurance coverage with your financial advisor.

By following these "spring cleaning" suggestions, you can help put your financial house in order for the seasons to follow. Take action soon.

Jimmy Stewart, AAMS, CFP, is an Edward Jones financial advisor in Urbana. He can be reached at (217) 328-1719 or

Maximize the longevity of
your retirement savings

Robert Ballsrud

Robert J. Ballsrud
CIBM Contributor

As you think about retiring, take the time to figure out how much money you will need.

One of the biggest concerns for retirees is whether their retirement savings will last the rest of their lives. Social Security is not the guaranteed source of retirement income it once was; most people do not want to depend on public assistance or their children during their retirement years.

Whether you might run out of money hinges upon several factors: how much money you have saved, how long you need your savings to last and how quickly you spend your money.

You will be better off if you can tackle these issues before retirement by maximizing your retirement nest egg. However, if you are in your retirement, some strategies to maximize the longevity of your retirement savings are listed below:

Watch your spending rate on retirement savings

Often people assume that they will be able to live solely on the income from their retirement accounts for the rest of their life.

At some point, you will probably have to start withdrawing a portion of your principal as well. Knowing this, you will want to be careful not to spend too much too fast. This can be a great temptation particularly early in your retirement, when there is a desire to travel extensively and to buy things that you could not afford during your working years. A good guideline is to make sure you spend only 4-5 percent of your retirement savings over time. If you withdraw from your portfolio too rapidly, you will not be able to earn enough on your remaining portfolio to carry you through your later years.

Actively manage your IRA withdrawals

One technique of stretching your savings is to withdraw money from your IRA as slowly as possible.

Not only will this conserve the balance in these accounts, but it will also give your IRA funds the opportunity to continue to grow tax deferred during your retirement years. However, keep in mind, that you must start taking required minimum distributions from traditional IRAs (but not Roth IRAs) after the age of 70 1/2.

Continue to invest for future growth

Traditional wisdom holds that retirees should value the safety of their principal by shifting their investment portfolio to all fixed-income investments, such as bonds and money market accounts.

This approach, however, ignores the effects of inflation. You will actually lose future spending power if the return on your investments does not keep up with the rate of inflation.

While it may make sense that your portfolio allocation become more conservative as you grow older, it is wise to still consider maintaining a portion of your portfolio in growth investments.

Laddering can reduce interest rate risk

Some investors are experiencing a single large deposit or investment maturing during the current interest rate slump.

If this is the manner in which you have your fixed income funds managed you are left with two undesirable choices regarding reinvestment. You can hold the money in a low-interest savings account until rates improve or roll it all over at the current low rates. However, a later rebound of interest rates can catch you locked into the prior low rate for an extended period. A better strategy would be to break your investment into smaller pieces and laddering maturity dates to avoid this situation in the future. This is called bond laddering.

Laddering is a fixed income strategy that staggers maturity dates of your fixed income investments so that they mature evenly over time. This strategy does not make significant interest rate bets because you will be consistently re-investing the portion of your portfolio that matures every year and through the various markets cycles.

Robert Ballsrud, CPA, CFA, is vice president of Busey Weatlh Management. He can be reached at (217) 351-2707 or

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