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Financial issues asretirement draws nearAfter years of saving and planning for retirement, you may be relieved and excited to

realize that you can finally afford to stop working. Careful planning in the months lead-

ing up to retirement can help ensure a smooth transition from employee to retiree.

If you have decided to retire, you haveprobably already addressed a host offinancial questions with your financialadvisor. You have inventoried all yourinvestments and retirement plan andSocial Security benefits to determine thatyou can actually afford to leave the workforce. You have probably already decidedon an initial annual withdrawal amountthat you feel you can take from yourinvestments every year without a sub-stantial risk of depleting your accountsbefore you die. If you are under age 65and ineligible for Medicaid, you haveundoubtedly determined how you willcover your health insurance needs.

Now your attention naturally has shiftedto making lifestyle decisions. How will

you occupy your time? Will you start volunteer work or embark on some newavocation? How frequently will youtravel? Will you spend winters in awarmer climate?

While it is easy to become preoccupiedwith all these exciting possibilities, youcannot overlook the fact that not all yourfinancial preparations have been made.The period of transitioning from thework force to retirement will itself present a whole series of financial issues to address. Following are some suggestions to think about as you workwith your financial advisor to make thetransition run as smoothly as possible.

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• You should try to reduce oreliminate credit card debtbefore you retire.

• Make sure to determinewhich accounts you willwithdraw from first.

• Remember to work with yourfinancial advisor to develop anappropriate asset allocationstrategy.

MFS HERITAGE PLANNING®

Helping Yourself. Helping Your Parents. Helping Your Children.®

By the numbers• 591/2 is the age at which you

can usually take distributionsfrom an IRA without penalty.1

• 701/2 is the age at which youmust begin to take distributionsfrom a traditional IRA.1

1 Source: Publication 590, irs.gov

Retirement

Key points

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Jim

DFS Courtesy

Reduce or eliminate your creditcard debt.

A high balance on a credit card cantranslate to a monthly bill of severalhundred dollars. Paying that bill willrequire you to withdraw more fromyour investments each year — andpotentially deplete your nest eggfaster. You will probably neverregret eliminating the burden of ahigh credit card balance — even ifdoing so requires you to stay in thework force a few extra months.

Get advice on how to take pay-outs from your pension plan.

Today, defined contribution plans,such as 401(k) plans, have becomemore common than traditional pensions, known as defined benefitplans, which pay you a fixedamount every month. But if youwork for a company that still offersan old-style pension plan, you mayhave a choice about how yourmonthly benefit will be calculated.For example, if you are married, thenormal benefit will be based on thejoint life expectancy of you andyour spouse, but other options suchas a monthly benefit based on onlyyour life expectancy may be availableif your spouse gives consent.

Generally, the option based on a single life expectancy will offer ahigher monthly benefit, and theoption based on joint life expectancywill provide lifetime income andprovide more security for you andyour spouse. While you and yourspouse may be tempted to makethis choice between larger paymentsand greater safety yourselves, youstill may want to consult your

financial advisor before making anydecision. He or she can take a closelook at your plan options, examinehow benefits are calculated, and help you select the calculationmethod that is best suited to youroverall needs.

Carefully weigh your options forhandling your mortgage.

If you are about to receive a large,lump-sum distribution from yourretirement plan, you may betempted to use a portion of thatmoney to pay off your house. Doingso could reduce your monthly billssubstantially. But again, it will beworth your while to consult withyour financial advisors before making such a big decision. If youstill have a number of years remaining on your mortgage, a good portion of your monthly paymentprobably still goes to interest. Theinterest deductions you can claimeach year may provide you with considerable tax benefits.

Ease your way into your new lifestyle.

When you are ready to embark on anew phase of life, you may feel it istime to leave all the vestiges of yourold lifestyle behind. But when making a dramatic change, such as selling your house and puttingdown stakes in a new part of thecountry, take a gradual step.Renting for your first winter, forinstance, may help you determine if you are ready to leave your oldneighborhood completely behind.Trying on the new lifestyle beforeyou commit can help reduce the

odds you will later regret your decision.

Develop an appropriate asset allocation strategy for your investments.

A generation ago retirees would shift most or all of their assets into conservative instruments such asbonds because these investmentscould provide the current incomeand principal stability they needed.But with earlier retirement ages andlonger life spans, today’s retireesoften need the potential of principalgrowth that stocks historically haveprovided.

As you prepare to transition yourinvestments into retirement, youwill want to meet with your financialadvisor to discuss how you will allocate your holdings. MFS®

believes investors of any age are bestserved by following a disciplineddiversification strategy that involvesthree basic principles:

• Allocate across the major assetclasses — stocks, bonds, and cash— taking into consideration thetime period you have to investbefore you retire.

• Diversify among the variousclasses to gain exposure to variousinvestment styles, such as valueand growth, and market sectors,such as government and corporatebonds.

• Rebalance your investments on a regular schedule to ensure that you maintain your desired allocation.

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Retirement


MFS Heritage Planni

Select which accounts you willwithdraw from first.

As a general rule, if you are underage 701/2, you will want to withdrawmoney from your taxable accountsfirst. Taking money out of a stockfund that you have invested in onyour own, for example, will allowyou to keep deferring taxes on the annual earnings in any IRAsyou own.

But again, you will want to consultwith your financial advisor to determine if this general ruleapplies to you. If you are in thelower tax brackets, the income taxesyou would owe on withdrawalsfrom a traditional IRA might actually be lower than the capitalgains you would have to pay for selling long-held stock fund shares.

With your financial advisor’s help,you can work out an initial scheduleof withdrawals from your variousaccounts that are appropriate foryour situation.

Balance your income needs withyour estate-planning goals.

Any dreams you have of leaving afinancial legacy for your childrenalso will affect the retirementplanning decisions you make.Money left in an IRA, for example,could bring greater tax consequencesfor your children than money intaxable accounts would. Here again,

the common wisdom of tapping taxable accounts first might notapply because, in the interest ofreducing the tax burden on yourchildren, you may prefer to takemoney out of your tax-advantagedIRA before touching your taxableaccounts.

In yet another scenario, some retireesmay find they could use their IRAsto create a legacy spanning severalgenerations of their family, using atechnique called the “Stretch IRA.” Ifyou have substantial assets in anIRA and do not need to tap theentire amount to meet your livingexpenses, you may be a candidatefor this technique. Your financialadvisor can provide the details onhow to put it into action.

Enjoy the ride.

The job of planning for retirementnever ends. Each year, you will wantto check in with your financial advisor to make sure your financialplan is performing as expected andmake any adjustments that may beneeded to help you stay on track.Still, those decisions you make in thefinal months leading up to retire-ment will have a considerableimpact. Get them right and you arefar more likely to be one of thoseretirees who can honestly proclaimthat retirement is all they everdreamed of and more.

The investments you choose should

correspond to your financial needs,

goals, and risk tolerance.



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MFS Fund Distributors, Inc., 500 Boylston Street, Boston, MA 02116 HP-RETNEAR-FLY-9-0814887.1

Choose What Fits.®

Retirement

MFS® does not provide legal, tax, or accounting advice.Any statement contained in this communication (includingany attachments) concerning U.S. tax matters was notintended or written to be used, and cannot be used, forthe purpose of avoiding penalties under the InternalRevenue Code. This communication was written to supportthe promotion or marketing of the transaction(s) or matter(s) addressed. Clients of MFS should obtain theirown independent tax and legal advice based on their particular circumstances.

Contact your financial advisor for more

information or visit mfs.com.

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Before investing, consider the fund’s

investment objectives, risks, charges, and

expenses. For a prospectus containing

this and other information, contact your

financial advisor or view online at

mfs.com. Read it carefully.