Bob Panian, a certified financial planner with Bear Creek Financial in Tukwila, praised Nancy Cifuentes for working hard to minimize debt...

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Bob Panian, a certified financial planner with Bear Creek Financial in Tukwila, praised Nancy Cifuentes for working hard to minimize debt and live within her means.

At retirement she will get a pension with cost-of-living adjustments and be eligible for Social Security. She has almost paid off the mortgage on her home in Seattle.

“A significant positive factor in her retirement plan is her simple lifestyle,” he said. “She truly has learned to enjoy life while living on about $1,200 per month.”

But he also gave the risk-averse Cifuentes plenty to think about.

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After all, as a healthy nonsmoker, she has a life expectancy of 88 — and many people outlive that. He said it’s wise for her to plan for at least age 95. That’s 40 years away for Cifuentes.

She has her entire deferred-compensation plan invested in a stable value fund. Such funds generally invest in large, established companies that pay sizable dividends but don’t generate the returns or carry the risk of a growth fund. She also is placing savings in CDs. Unfortunately, their low interest rates mean an inflation-adjusted return of only 1 percent to 2 percent a year.

Panian suggested Cifuentes pay more attention to asset allocation: a conservative portfolio with 8 percent in cash, 64 percent in bonds and 28 percent in stocks. While no one can predict the future, this could reasonably deliver a return of 4 percent, inflation adjusted, while still providing protection against major market swoons.

Another move: Resume contributions to the deferred-compensation plan. Even though it doesn’t get an employer match, her contribution can give her a current tax deduction. She can defer taxes on the money until she needs it or age 70-½. Panian suggested 6 to 8 percent of her income be placed in the plan.

Panian also recommended that she open a Roth IRA. It won’t offer a current tax deduction but will let her avoid taxes on the growth of the fund and give her more flexibility in retirement.

Finally, Panian suggested that she put off receiving Social Security benefits.

“Rather than collecting Social Security at age 62,” he said, “I recommend that Nancy wait until full-retirement age, and instead live on her pension and what she can earn with part time or seasonal work. This way she has no limitation on what she can earn, and she will be more financially secure in her later years.”