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My father is retiring this April and he was asking me for advice. I have no idea what to recommend and thought I'd ask the experts here......

He's getting $125,000 f/ his IRA. He currently has $40K invested in various stocks (WCOM, SBH, SNPS, NITE).

What should one do to prepare for retirement, limit tax liability, and invest for the future?

Thanks so much and advance,
Jason
jchung30@hotmail.com
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<<My father is retiring this April and he was asking me for advice. I have no idea what to recommend and thought I'd ask the experts here......

He's getting $125,000 f/ his IRA. He currently has $40K invested in various stocks (WCOM, SBH, SNPS, NITE).

What should one do to prepare for retirement, limit tax liability, and invest for the future?>>

Planning is the key to this process because your father will only get one shot at this. If his only assets are those outlined there is a very real chance he may outlive his money.

The first step is to identify all of his assets and liabilities. Then create a budget to determine his current cash flow needs.

You asked about investment strategy but before you can determine this you will first need to find out if he will need some of these funds to live on today.

Think of matching assets to liabilities. If he needs current income from the money you will need to invest for income and protection of principal. If he does not need current income and his need to consume the assets inquestion is ten to twenty years out - then you can invest in value equities to compensate for the effects of inflation.

I hope this help.

P.S. Make sure he signs up for Medicare Part B and you look into a medicare supplement insurance. Given the assets inquestion you may want to not worry about a long term care policy - he will spend down before you know it and have access to government assistnace if necessary.
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One would hope that your father will be getting pension and social security payments in addition to his IRA. Then as ZZFly pointed out, he should arrive at some goal for his IRA funds. Does he need income from the IRA for living expenses? Is it for some optional extras like travel? Is it just for future emergencies?

The usually Foolish recommendation no matter is that he should put most of the money into stocks--to provide inflation protection. The recent volatility of the stock market and weak performance makes you wonder if now would be a good time to do this. Perhaps put the money in money markets for now until things stablize a bit.

An S&P Index fund such as Vanguard Index 500 is the usual basic recommendation. If he is comfortable with stocks then Foolish Four or the Rule Maker stocks with a long term buy and hold strategy could be best. Take a look at the Foolish sources beginning with Fool School from the fool.com homepage before you decide.

Best of luck to you.
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