Retirement Planning

<strong>What's a Good Retirement Plan?</strong>

What's a Good Retirement Plan?

Planning and investing for retirement is a lot like the butterfly effect - a small change in one part of your plan can have large consequences over time. The phenomenon applies similarly to those savings for retirement as it does to those in retirement. Many of our financial and life decisions are intertwined, so it's vital to evaluate the implications that each decision can have on the whole system.

A good retirement plan takes all of these interdependencies into account. We work closely with clients to develop comprehensive and personalized financial plans with dynamic scenarios, helping each client make the decisions that matter most to them.

What brings us the most joy is providing clients options with relevant tradeoffs to help make financial decisions. We help illuminate the path on your journey and can explain what lies ahead when there invariably are forks in the road.

"I feel that one of the most important lessons that can be learned is that what we 'see' may be different than what is actually in front of us."

- Mark Singer, author of The Changing Landscape of Retirement -- What You Don't Know Could Hurt You

Basics of Retirement Planning

Save, save, save. While that is generally great advice, we often need more. What workplace retirement plan should I save in? Should I save in an IRA too? What about Roth IRAs? What if I may need some money before I turn 60? What about saving for non-retirement goals? How much should I save? I can't save in all these accounts - which should I prioritize?

When you approach retirement and are in retirement, the questions never cease. When should we claim Social Security? Have I saved enough to retire? How should we change our investments? What are the tax implications for withdrawing our nest egg? Should we do Roth conversions, and if so, how much? What about Medicare, Medigap, and Medicare Advantage?

These are all complex and personal questions, so the answers depend on your circumstances. That can be an unsatisfying response to someone looking for specifics, but that's where we come in. We can help you think through these decisions and provide a clear, objective framework to evaluate the tradeoffs. We can outline the pros and cons of each pathway to help you make the most informed decision possible.

The Retirement Income Puzzle

According to a 2020 Gallup poll, most retired Americans have four sources of income in retirement - Social Security, pensions, 401(k)/IRAs, and personal savings/CDs. A majority of younger Americans expect that part-time work will be at least a minor source of income in retirement, if not more. From the same survey, Gallup found that expected retirement ages have changed little, hovering between 64 and 66 since 2004.

 Creating your "retirement paycheck" requires a multi-faceted approach. Here are a few tips to consider if you are still saving and if you are retired:

    • Free Money - if your employer offers a company match on your contributions, make sure you get all the benefit you deserve
    • Tax-Plan Early - seriously consider contributing to a Roth IRA, if eligible - withdrawals are tax-free and a great source of retirement income
    • Asset Optimization - brokerage accounts, 401(k)s, Roth IRAs all have different tax treatment, so your investments in each should reflect that
    • Claim Smart - when it comes to Social Security, make sure that you don't leave anything on the table
    • Keep Tax Planning - speaking of Social Security, some of your benefit can be taxable but you can limit this by utilizing tax-free retirement income
    • Roth Conversions - if there is a gap between when you retire and when you claim Social Security, use these low income years to convert IRAs to Roth IRAs
    • Withdrawal Sequencing - since each income source and investment account is treated differently, optimize which source you rely on first
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Why Develop a Retirement Plan?

A retirement plan is more than an annual savings amount to ensure that you have enough wealth when you retire. A retirement plan updates as your life grows and your priorities change. In your early working years, we can help you outline how much to save and what accounts to save in. In addition, we can help prioritize the non-retirement goals you may have - home purchases, savings for education, starting a business.  We've even helped clients evaluate job opportunities and negotiate raises.

As retirement approaches, your plan should evolve as well. Your investment strategy depends on the other sources of income you may have in retirement - pensions, rental income, Social Security. We can help weigh the tradeoffs between paying down any remaining debt, converting tax-deferred investments to tax-free, or retiring a year or two earlier. Each one of these decisions has repercussions on your plan.

Once you are in retirement, the plan never stops. It's crucial at this point to ensure you maximize Social Security, withdraw from your investment accounts in the most tax-efficient manner, consider the implications between Medicare plans, plan for your estate and heirs. We are here for you before, near and through retirement. The financial decisions and opportunities are ever present and we don't stop working for you once you have stopped working.

<strong>Key Takeaways</strong>

Key Takeaways

    • Evaluate all retirement saving strategies and balance saving for retirement against other goals
    • Start thinking about taxes in retirement today
    • Retirement decisions are interrelated, let us help you evaluate the tradeoffs
    • Maximize the government benefits you deserve and paid for - Social Security and various parts of Medicare 
    • Withdraw wisely from your income sources and savings - consider stability, growth, and taxes

For more information about our firm and the services we offer, send us a quick email or call The office today. We would welcome the opportunity to speak with you.

(240) 200-4950