William Creekbaum: Boomers face retirement

Just as they've revolutionized American culture, baby boomers are reinventing retirement. They are expected to live longer, play harder and - most telling of all - many are also planning to work in some way in their later years.

Not surprisingly, many are also worried about outliving their savings. With 76 million baby boomers heading toward retirement, it has never been more critical to plan for what lies ahead. Here's a checklist for what I believe you can do now to help position yourself smartly.

• We're going to live longer - but we're also going to require more in the way of health care. In your 50s, if not before, start thinking about long-term care insurance, which may pay for nursing home and in-home care. Also, factor the cost of regular health insurance into your retirement budget. And remember that when you retire from your job, the insurance policy you walk away with, called COBRA, will expire after 18 months unless you convert the policy. The bottom line: Do your homework to see what works best for you.

• Be as trim as you can by paying off your debt and investing in capital expenses, such as energy efficiencies, that will reduce bills down the road. And test-drive your retirement plan. Figure out what kind of lifestyle you want and how much it will cost - then live on that budget for a while. Most of your day-to-day expenses probably won't differ that much. As for big-ticket items like travel or that yacht you've always wanted, be brutally honest about just how much you can afford. Also, be sure to build an emergency cushion into the spending plan you construct.

• Think hard about where you want to retire and the economic benefits that different regions bring to the equation in terms of real estate taxes and everything else that will add up to your cost of living. Also, if you're still working and own your home, now may be the time to get a loan to finance the second home you may be thinking about buying.

• A lot of people leave their 401(k) accounts behind when they job-hop. Before you retire, it's a good idea to consolidate your retirement accounts. With all your financial accounts in one place, you'll recognize whether you're overweighted in a particular sector. Perhaps you'll want to start rebalancing in some fixed-income investments. At this point, if you haven't developed a relationship with a financial adviser, it would be wise to do so.

• If you withdraw money from your 401(k) or Individual Retirement Account before you're 59, in most cases you're going to pay regular income taxes on it, plus a 10 percent penalty tax. After that age, you can take as much money out as you wish, though you'll still pay income taxes. The glory of the retirement account is that your nest egg is growing at a tax-deferred rate. If you have to tap into any account, target your taxable accounts before you hit the tax-deferred ones. Also, be sure your beneficiary forms are up to date on your retirement accounts; the beneficiaries named will take precedence over what your will states.

• Make sure you have a durable power of attorney, a living will and a will. It's also important to maintain an updated list of policy numbers and current contact information. Be sure to add all the passwords on your accounts to the form so that your designated beneficiary or trusted advisers can access information on your computer or other electronic devices. A copy of such information should be kept with a lawyer, a trusted relative or in a lockbox.

Everything in retirement begins with a plan. But plans are fluid and circumstances change; you'll likely have to change the plan you start out with. Recalculate on a regular basis. Are you in line with your projections? What life events or circumstances have transpired that might have affected your thinking on retirement? And remember, too, that it isn't only about the money, are you living the lifestyle you want? For more information, please contact me at William.a.creekbaum@smithbarney.com or 689-8704.

• William Creekbaum, MBA, CFP, a Washoe Valley resident, is senior investment management consultant of Morgan Stanley Smith Barney LLC. He can be reached at william.a.creekbaum@smithbarney.com or 689-8704.