Investment Advice can also be a significant factor when you terminate employment. Whether you are participating in the Pension Plan and enrolled in DROP or participating in the Investment Plan, your investment selections should provide a strategy designed to match your lifetime income goals and plans.

More than likely, you have additional investments such as 457 Deferred Compensation, 403(b), IRA’s and Roth IRA’s that need to be included in your planning.

What Are Your Plans?

• Will you need monies for a major purchase such a boat, airplane, car, home, land or vacation?
• What percentage of your monies will be used for immediate income?
• What percentage should be set aside to provide for future income?

There Are Many Factors To Consider While Choosing An Investment

A. Alternative withdrawal strategies based on age (72t distribution to avoid the 10% penalty if you have not attained the age of 59 1/2)

B. The number of years you plan to allow the money to accumulate before taking receipt

C. Payout method that has the flexibility to be changed without incurring a penalty

D. Fees: load or load-waived, annual contract, management, administrative, maintenance, mortality, advisory, 12b-1, transaction, withdrawal charges

E. Dollar Cost Averaging (DCA) – systematically investing in the market in order to potentially minimize the effects of volatility. DCA does not protect against loss in declining markets. DCA involves continuous investments in securities regardless of the fluctuating price

F. Model Portfolio: (Income, Conservative, Moderate Conservative, Moderate, Moderate Aggressive, Aggressive) Based on:

1. Risk Tolerance – measurement of your ability to withstand sudden downturns in the market
   
2. Time Horizon – combination of years prior to withdrawal and period of time that money is withdrawn
   

G. Ability to change investments as your circumstances change

H. Ratings (analysis of company’s finances and risks): Morningstar, A.M. Best, Moody’s, S&P, Fitch

I. Customized Investment Strategies:

1. Asset Allocation – diversifying by investing in a variety of categories to spread the risk
   
2. Rebalancing – resetting your investments to the original allocation percentage
   
3. Style Drift – when a fund changes its investment strategy; thereby causing a reclassification of the fund’s asset class

J. Plans to convert to a Roth IRA – This will increase your Federal Income Tax in the year of conversion

K. Inflation – how will your investments and income be affected by rising costs?

L. Taxes – is there a strategy to maintain income in lower tax brackets?

Note: Asset allocation and diversification cannot guarantee profit or insure against a loss. There is no guarantee that any investment strategy will be successful; all investing involves risk, including the possible loss of principal.

Note: Dollar Cost Averaging does not ensure a profit and does not protect against loss in declining markets. Investors should consider their ability to continue investing through periods of fluctuating market conditions.