NEW LAW MAY AFFECT YOUR RETIREMENT PLANS (FINANCIAL FOCUS)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Do you plan to work during your retirement years? Some 80 percent of baby boomers expect to do just that, according to a survey prepared by the American Association of Retired Persons. If you're in that group, then you'll be interested in a law recently passed by Congress and signed by Bill Clinton.

This legislation allows senior citizens to earn as much money as they like without sacrificing Social Security benefits. Previously, workers age 65 through 69 lost $1 in Social Security benefits for every $3 in wages above an annual limit of $17,000.

The benefit of this new law may be almost as important psychologically as it is financially. Under the old system, even if you didn't actually need every dollar you could get from Social Security, you still wouldn't have wanted to sacrifice benefits that you worked many years to earn. Besides that, you may have been looking forward to working during retirement -- not because you had to, but because you wanted to try something new. Maybe you wanted to open a small shop, do some consulting or launch a new type of business you've always thought could succeed. Under the old law, you would have been penalized for pursuing your desire. Now, that has all changed.

The new law may affect your retirement-funding plans. For example, if you can expect more income from employment during your so-called retirement years, you may be able to get by with less income from your investments. Previously, you may have thought it necessary to weight your portfolio more heavily toward income-producing investments, such as Treasury securities, bonds or bond-based mutual funds. But now, you may want to consider adding more growth elements, such as stock or stock-based mutual funds.

At first glance, you might balk at the thought of adding more stocks to a portfolio you're relying on to carry you through retirement. After all, stocks can be more risky than other types of investments. But you need to remember that you are likely to spend a long time in retirement -- possibly two even three decades. During your retirement years, if you were to have all your investment dollars in fixed-income vehicles, you would eventually begin to lose purchasing power, even in periods of relatively mild inflation. You simply cannot afford a portfolio with no growth elements.

Ultimately, you'll probably need all your financial resources to fund your retirement. But by planning ahead and making the right moves, you can retire in style.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.