Financial Planning

Retirement Planning

Retirement can be a smooth transition or a jarring change. While money management is a necessity, planning for lifestyle changes and psychological adjustments is also very important. Today’s retirees can expect longer, healthier, and more active retirements than any other generation in history. But along with these advantages comes the responsibility to take care of the money you’ve accumulated. You’ll need to pay for that longer, healthier lifestyle and make your savings last much longer than your parents did.

Our job in this retirement planning arena is to help you match your needs and goals with the most suitable financial products and investments available. Given today’s dramatically longer life expectancies, combined with declining Social Security payouts and escalating health care costs, your planning is more complex than generations before you. Thus, as a beginning point to retirement planning, we help you make a realistic appraisal of your financial situation and then help you to balance your immediate financial needs with long-term plans to help ensure that you don’t run out of money during retirement, and can enjoy the lifestyle you want.

Once upon a time, retirees were expected to rebalance their investment portfolios in order to reduce their positions in stocks and increase their ownership of bonds. It was thought that retirees had to be more “conservative” because they needed the income from bonds and could not afford the risk of investing too heavily in often-volatile stocks. Today, bonds still play an important role in the portfolios of many retirees, but we also caution that it may be a mistake for you to be too heavily weighted in bonds. With the longer life expectancies referred to above and bond yields at historically low levels, you may need to consider equities*and other alternative investments**in order to potentially generate the kind of capital growth required to sustain you through a retirement that lasts 15, 20 or even 30 years or more.

Planning for retirement is like trying to hit a moving target. The further you are from retirement, the cloudier the picture will be. It is possible, however, to develop a viable plan based on reasonable projections of what you will need to retire and on the resources you can expect to have available.

Once you’ve determined your retirement income needs, you must come up with ways to meet those needs. Obviously, the earlier you start planning and saving for your retirement, the easier it will be. However, it is never too late to start saving for retirement. One way to boost returns on retirement savings is to take full advantage of opportunities to defer federal income tax on your retirement investments. On any investment, your real return is the return you earn after taxes are paid and inflation is accounted for. While you can’t stop inflation, you can use various planning strategies to stop annual income taxes on your retirement savings and investments until you retire and begin using your money.

One of the easiest ways to defer taxes on your retirement savings is to invest through a tax-advantaged or “qualified” retirement plan, such as an employer-sponsored 401(k) or 403(b) plan or some form of an individual retirement account (IRA). Annuities and life insurance programs can also act as very tax-efficient retirement plan supplements due to their tax-preferred features and benefits.

Just as important, are decisions involving retirement plan distributions. When you’re ready to retire, or if you leave your present job to take another, you’ll need to decide how to handle the retirement savings you’ve built over the years. Making the proper distribution decisions can be extremely complex. Laws require certain minimum distributions on some retirement plan assets, while others can be continually deferred. We help you determine which assets to draw from to comply with these complex laws as well as to maximize your retirement dollars in the most tax-efficient manner.

The age at which you choose to begin taking your Social Security check makes a big difference in the annual amount you receive. Deciding when to take your Social Security benefits is a big, and sometimes complicated, decision. We help you make an informed decision by reviewing with you several questions and scenarios. You can find out for yourself what your estimated monthly Social Security benefit would be by calling the Social Security Administration toll-free at 1.800.772.1213 to request a “Personal Earnings and Benefit Statement” based on your actual earnings history.

Once you have an estimate of your anticipated Social Security benefit, you will most likely realize, as most American’s do, that your Social Security benefit will not come close to supporting the retirement you’d like to achieve. In fact, the current average monthly Social Security benefit places a retiree just above the federal “poverty level.”*** At best, Social Security should be depended on strictly to provide a basic safety net. Many of our younger clients prefer not to include future Social Security benefits into their retirement projections at all.

Remember, you could spend a third of your life in retirement. Proper planning could make the difference between enjoying the golden times we all dream of, or facing a constant struggle just to pay the bills.


* Stock investing involves risk including possible loss of principal.
** Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
*** Source: Soc.Sec.Online 2012; Department of Health and Human Services (HHS)

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