Category Archives: Retirement Planning

Ideas to help preserve and grow your money

What should I do with the $300,000 I am about to inherit?

My Comments: What would you do if you just found out you were getting an extra $300,000? And to whom is this question posed?

The article appeared in a news feed on my phone this morning as I was drinking coffee and getting ready for the day. You can find it HERE.

I’m sharing it with you for other reasons, none of which should imply I’m about to have an extra $300k, because I’m not. Unfortunately.

Since it appeared in a public forum, there are financial advisors across the country, who when asked this question by someone, will immediately think of answers like these:

1. Buy stocks and bonds (I make a commission.)
2. Buy an annuity (I make a commission)
3. Invest in a managed portfolio (I earn a fee or % of the assets invested)
4. Buy a portfolio of mutual funds and let me manage them (I make a commission and a fee)
5. I’m a realtor also, so buy a property and hope it appreciates (I make a commission)
6. Buy a life insurance policy and gain tax advantages (I make a commission)
7. Etc., etc., etc….

To be fair, some of those thoughts crossed my mind since for the past 41 years, I’ve called myself a financial advisor and earned a living from commissions and advisory fees.

On the other hand, offering someone a litany of options, all of which might be valid choices, begs the question that should immediately follow the above question, which is “What are your strategic goals?”.

This implies that someone has developed and articulated their strategic goals, all of which surface when you ask yourself certain questions. For example:

1. I’m a long way from retirement, so do I want to spend it now or do I want to grow it and spend it in the future?
2. I’m close to retirement and this money will help a lot but I have an immediate need to pay down debt. Should I use it for that or perhaps pay off my home mortgage?
3. How much money do I make now and how significant is this $300k in the grand scheme of things when it comes to living my life the way I want to?
4. I know that receiving this money has no current income tax implications for me but if I successfully turn it into $400k, what are the future tax implications?
5. Does having this money present opportunities to limit other existential threats to my financial future like bankruptcy, my future health needs, living too long and being broke, paying more taxes than I need to pay?
6. How much risk am I willing to accept without getting really nervous?
7. Etc., etc., etc….

The lesson learned by me from the article is that there are people who are only in the ‘answer’ business and there are people in the ‘question and answer’ business and if this happens to you, you should first find someone in the ‘question and answer’ business that you can trust and enjoy working with, who will help you first define your strategic goals.

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Medicare open enrollment begins Sunday – and not just for those age 65 and up…

My Comments: Have you noticed a flurry of ads on TV recently talking about Medicare and all the benefits you are entitled to for one easy price per month? I have.

The ads promote the use of Medicare Plan C, also known as Medicare Advantage plans. They are a sop to the insurance industry, giving companies a way to make more money by selling you stuff you may or may not need.

Years ago I decided those extras had little value to me and only lined the pockets of agents and companies at my expense. That’s not to say you might find value with them but as a financial professional, I refused to play the game.

Last year during the open enrollment period, I checked my coverage for Part D, the prescription drug coverage plan. I went to https://www.medicare.gov/, found the spot where you can compare alternatives, and entered the drugs I’m taking for a price analysis. The result was signing up for a different provider and it saved me $85 per month. Not bad.

That being said, if you are already on Medicare or your 65th birthday is around the corner, I encourage you to visit the official Medicare web site. It has good information. Go here: https://www.medicare.gov/

Normally when I write one of these posts it’s to share an article written by someone else. This time I’m simply going to give you two active links to follow if you think any of this is important to you.

Link #1: https://goo.gl/p8nRiF

Link #2: http://flip.it/fg6foM

Remember, there’s also a link just to the right on this page where you can schedule a conversation with me as you wrestle with all this…

How to Get Medicaid for Nursing Home Care Without Going Broke

My Comments: Politicians apparently have no earthly idea what getting old does to your finances. Of the 50 state Medicaid directors, red states and blue states, all 50 came out in opposition to the most recent attempt by Congress to repeal the ACA or ObamaCare.

None of us are willing to allow the elderly to die in the streets for lack of care. That means programs like Medicaid must be properly funded.

We can argue till the cows come home about the need for rules to prohibit unfair advantages and you’ll get my approval for such rules. There will be competing agendas but does that mean we should give up?

And somehow, these rules must be written to allow intelligent financial planning. Rules that include how to be cared for without losing your financial sanity. Gabriel Heiser’s ideas have value for all of us.

Gabriel Heiser 9/21/2017

Well-off people can easily go broke paying for sky-high nursing home care: First they deplete their own funds and then, eventually needing Medicaid, spend down nearly all the rest of their assets to qualify for that government program designed for low-income individuals.

The way to avoid this terrible situation is to put in place a Medicaid asset-protection plan early on. One powerful solution is to buy a single-premium immediate annuity, says attorney K. Gabriel Heiser, an elder care Medicaid expert, in an interview with ThinkAdvisor.

For 25 years, Heiser focused exclusively on elder law, and estate and Medicaid planning. He is author of “How to Protect Your Family’s Assets from Devastating Nursing Home Costs: Medicaid Secrets” (Phylius Press 2017-11th updated edition).

Sixty percent to 70% of nursing home patients are on Medicaid, says Heiser.

In determining eligibility, Medicaid differentiates sharply between “assets” and “income.” The potential Medicaid recipient is permitted to have only $2,000 in assets, though they can still receive certain income under certain circumstances.

In the interview, Heiser discusses a number of techniques — all of them legal — to shelter or reduce assets to qualify for nursing-home Medicaid.

One of the best, he says, is a so-called Medicaid-Friendly annuity, which essentially converts “countable” assets into income, which is exempt.

The average cost of nursing home care is $92,000 a year and much higher in New York and Hawaii, among other states. The average stay is two-and-a-half to three years. Care for a person with Alzheimer’s disease in a locked unit can come to more than $450,000 annually and is typically for a period of at least five years, Heiser says.

Though Medicaid wasn’t created for middle-class people “to pass their money on to their children at taxpayers’ expense,” Heiser writes, he reasons that it makes sense and isn’t unethical to “avail yourself of the laws” in order to minimize expenditures on nursing home care and indeed “pass those savings on to your children.”

Most folks make the mistake of waiting too long to plan for asset protection, says Heiser. They should begin at the first sign that their spouse, parent or sibling likely will need nursing home care.

Heiser was formerly chair of the estate planning committee of the Massachusetts Bar Association and an adjunct professor of the College for Financial Planning at David Lipscomb University. A professional version of his book, “Medicaid Planning: From A to Z,” is directed at attorneys, financial advisors and CPAs.

ThinkAdvisor recently spoke with the semi-retired Heiser, 68, on the phone from home in San Miguel Allende, Mexico. He revealed some of his Medicaid secrets and how they can help clients shelter their assets. Here are highlights:

THINKADVISOR: What’s critical to know about Medicaid?

GABRIEL HEISER: To qualify, you can’t have more than $2,000 in Medicaid-countable assets. So if you have cash in the bank or any other assets that aren’t on the exempt list, they’ll count toward the $2,000. That’s not a very high amount — but the point of Medicaid is that it’s supposed to cover the poor.

You write that hiding money and not reporting an asset on a Medicaid application is fraud.

Yes, fraud against the government. You’ll be disqualified for Medicaid, and there are also criminal penalties.

What about having income?

You can still qualify if you have, say, pension income. But there’s a cap of $2,205 a month for Medicaid recipients. However, some states have a rule that if your income is over that figure, you can direct your Social Security or pension into a trust — a Miller Trust, also known as a Qualified Income Trust.

The trustee pays the money to the nursing home, and Medicaid pays the difference. Typically, the bills are going to be more than $2,000 a month. So even though you have income over the cap, you can still qualify by setting up that trust.

Note: there are three more pages of Gabriel Heiser’s words of wisdom on this topic. To read the rest, click HERE.

A Majority of Working Americans Are Completely Wrong About Social Security

My Comments: The first monthly Social Security income benefit ever paid was to Ida May Fuller on January 30, 1940. Today, some 77 years later, it is a critical income source for millions of Americans.

This article by Sean Williams confirms the role Social Security plays in the lives of millions of Americans, and I’m one of them. If not already, you too will become a recipient of benefits from this 82 year old program.

I’m creating an internet course called Successful Retirement Secrets. It will have three major topic areas, one of them about Social Security.

The course will be a comprehensive and sophisticated outline for someone to follow as they slowly move through life toward retirement. I expect to have it ready to go before year end.

Sean Williams | Dec 10, 2016

In terms of retirement income, no program is more vital to seniors’ financial well-being than Social Security. For more than 75 years, Social Security income has been providing a financial floor for countless seniors, with the Center on Budget and Policy Priorities estimating that elderly poverty rates in America are just 8.5% because of Social Security income, as opposed to 40.5% without it.

Data from the Social Security Administration backs up this reliance on benefits. According to the SSA, 61% of all beneficiaries are counting on their Social Security benefits to supply at least half of their monthly income. This figure was particularly high (71%) for unmarried elderly individuals. Even pre-retirees, which believe they’ll be less reliant on Social Security than the current generation of beneficiaries, would likely struggle to make ends meet without Social Security income.

While on one end Social Security has been a financial blessing for many retired workers, their spouses, and their families, it’s also a major cause for concern. Projections from the Social Security Board of Trustees suggest that the program could begin paying out more in benefits than it’s bringing in via payroll taxes, interest, and through the taxation of benefits by 2020, ultimately culminating in the program exhausting its more than $2.8 trillion in spare cash by the year 2034.

A majority of working Americans have this all wrong

If you’re among the many retirees reliant on Social Security, the idea of the program “exhausting its spare cash” probably sounds terrifying. The TransAmerica Center for Retirement Studies, which regularly surveys Americans to get a feel for their retirement preparedness and knowledge, found earlier this year that 77% of workers are concerned that Social Security will not be there for them when they retire. Yet the truly terrifying fact here isn’t that Social Security’s spare cash is expected to be depleted in less than two decades; it’s that a majority of working Americans are just plain wrong about Social Security.

One of the near-surefire guarantees of Social Security is that it will be there when baby boomers, Generation X, millennials, and Generation Z retire. In other words, Social Security won’t be going bankrupt anytime soon, if ever.

The reason Social Security will be able to provide benefits to America’s retired workforce, the disabled, and survivors of deceased workers lies with the payroll tax. Even if the more than $2.8 trillion current in spare cash is depleted as the Trustees report has predicted, payroll tax revenue — a 12.4% tax that’s often split down the middle between you and your employer, or which is paid in full by the self-employed — will continue to be levied and collected on America’s workforce. As long as Americans keep working, the program will continue to generate revenue.

Social Security can, in theory, continue forever as a budget-neutral program that pays out benefits based on what is collected via payroll tax revenue and the taxation of benefits. Interest income earned from its spare cash is the only component of the program set to essentially disappear once that excess cash has been exhausted.

Two steps for working Americans to take now

The true worry for working Americans should be that their future Social Security benefit may be reduced from its current trajectory. The Board of Trustees estimates that when the spare cash is depleted, across-the-board benefit cuts of 21% may be needed to sustain the program through 2090. This would put three in five retirees who count on Social Security for a majority of their monthly income in a very precarious position.

This estimate serves as a wake-up call for working Americans to both (1) have a working budget and retirement budget ready, and (2) have alternative channels of income for retirement.

1. Have a working and retirement budget

Budgeting is critical for a variety of reasons but none more important than that it helps you understand your cash flow. If you don’t have a firm grasp of where your money is being spent once it’s deposited into your account by your employer, then your chances of maximizing your saving habits or minimizing your discretionary spending is low.

Creating a budget can be done entirely online these days with the use of free software, and the biggest challenge is no more involved than adding and subtracting and sticking to your plan. Some of the most helpful hints for budgeting with the goal of saving as much as you reasonably can for retirement include:

• Getting everyone in your household involved, since it’ll encourage you and those around you to stick to the household budget.
• Meeting up with like-minded individuals once or twice monthly to share your ideas and progress.
• Using separate accounts for different spending categories, such as food and entertainment.
• Most importantly, analyzing your data monthly to assess your progress.

Having a retirement budget is just as critical as the budget working Americans use to save money. Retirement probably means giving up a consistent working wage for good, and for many Americans that can mean a sudden drop in monthly income. If you’re nearing retirement and haven’t thought about a retirement budget, you could be in for a shocking surprise when your income drops 10%, 20%, or even more once you retire, especially if you’re still working with your old budget from when you were working.

Furthermore, not having a retirement budget in place could lead to you depleting your nest egg faster than expected or pulling out more than you need from your retirement accounts each year and paying more in taxes as a result.

2. Have alternative channels of income

Working Americans also need to ensure that they have alternative channels of income beyond just Social Security when they retire. If you have other forms of income, then a 21% cut to Social Security benefits may not be crippling to your financial well-being.

Arguably the most popular retirement income channel is the employer-sponsored 401(k). According to StatisticBrain.com, 52.5 million Americans have a 401(k), with the value of assets held by 401(k)s totaling about $4.5 trillion. A 401(k) is a tax-deferred retirement plan, meaning the money is taken out pre-tax and can lower your current-year tax liability. However, you’ll owe federal tax once you begin making withdrawals during retirement. A 401(k) can be particularly attractive if your employer offers to match a percentage of your contribution, which is essentially free money.

For those of you who work for an employer that doesn’t offer a 401(k), either a traditional IRA or Roth IRA is always available. The popularity of the Roth IRA has grown particularly quickly in recent years since eligible distributions are completely tax-free. Unlike a traditional IRA or 401(k), which provide that aforementioned up-front tax benefit and deferred taxation until retirement, a Roth IRA is funded with after-tax dollars — and since you’ve already paid your taxes on those dollars, any subsequent gains on that money is free and clear of taxation as long as you make a qualified withdrawal.

Long story short, there are ample ways for working Americans to save money and diversify their income stream during retirement. Social Security will be there for you when you retire, but that doesn’t mean you should rely on it to be your primary or sole source of income.

How to Pay Off Your Mortgage Before You Retire

My Comments: Retirement is the third stage of our lives. #1 is childhood when our needs are provided for by adults; #2 is adulthood when our needs are met by our efforts; and #3, retirement when you quit working for money and money has to work for you.

If you’re lucky, you don’t need to learn a new skill set to retire successfully. Or you understood what had to happen before you retired. One of those things is not having to pay more than necessary for shelter.

In a perfect world, you are happy with where you live and like whatever it is you live in. And before you retired, you figured out how much extra you had to pay each month to make the mortgage disappear just when you quit working.

Wendy Connick, Sep 28, 2017

Housing is the single biggest monthly expense for many families, so if you don’t have a housing payment to worry about during your retirement years your savings will last you a lot longer. Paying off your mortgage by the time you retire isn’t complicated; it just requires a little preparation.

Your repayment plan

If you know how much you owe on your mortgage, your interest rate, and how long it will be before you retire, figuring out how to get rid of the mortgage in time isn’t difficult. You can even use a mortgage payoff calculator to see the effect of adding extra payments.

For example, let’s say that you owe $220,000 on your mortgage at 5% interest, and it’s scheduled to be paid off in 25 years. However, you plan to retire in 20 years. Making an extra principal payment of $170 per month would get you paid off in 19 years and 11 months, and incidentally save you just over $38,000 of interest over the life of the loan.

Sticking to the plan

Coming up with a repayment plan is the easy part — sticking to it is a lot harder. Scraping up an extra $170 every month for the next 20 years can be a daunting task to undertake. Fortunately, there are ways to make saving that extra payment a lot easier.

First, make sure that the extra payments you make are to the mortgage’s principal, not a combination of principal and interest like your regular payments. Putting the extra money into the principal means that the loan will be paid down much faster, and you’ll save a lot more money on interest during the life of the loan.

Next, find a way to automate your extra payment. Ideally, this would mean setting up an automatic extra principal payment with your mortgage company, to happen along with your regular monthly payment. If the mortgage company can’t or won’t set this up for you, the next best option is to do an automatic transfer from your checking account to a special, dedicated savings account.

The biggest benefit of the second approach is that rather than taking a single large sum each month, you can spread your transfer out into multiple tiny transfers, which will be less disruptive to your checking account balance. For example, instead of doing one $170 transfer each month, you could transfer $5.70 every day from your checking to the special savings account. When it’s time for you to make your mortgage payment, you just make the extra principal payment straight from the savings account.

The biweekly payment option

Switching to a biweekly (every other week) payment system, instead of a monthly one, is another way to pay off a mortgage faster — assuming that it will take care of your loan balance in time. Splitting your monthly payment into two biweekly payments works because there are 52 weeks in a year, so it comes out to the equivalent of 13 monthly payments per year instead of just 12.

The main argument against biweekly payment schedules is that the extra money goes to both principal and interest, just like your normal payments. That means that your extra payment won’t go as far toward paying off the loan quickly as if you’d made the same extra payment toward principal only. Also, many lenders charge to make the switch from monthly to biweekly payments. So unless you have a significant reason to do so, stick with making extra principal payments. It’s the simplest way to have a retirement free from monthly housing bills.

DOL fiduciary rule won’t help some 403(b) retirement plans

My Comments: You should read this If you are an employee of a public school district, or a charity, or a foundation, or a church based enterprise.

Under the Obama administration, rules from the Department of Labor (DoL) were proposed that imposed what is known as a fiduciary standard on any individual or company engaged in advice with respect to ‘retirement plans’.

A fiduciary standard means that any such advice must be in the clients best interest. Absent a fiduciary standard, advisers are free to recommend stuff that might or might not be appropriate. It’s a much lower standard.

As you might expect, major Wall Street companies and insurance companies were opposed to this from the beginning. They didn’t and don’t want to be held accountable for bad behavior by their agents.

The rule was supposed to go into effect nationally last April 10th. However, the Trump Administration said the rule was onerous and would be delayed if not removed.

Despite all this, a little known feature or exemption to the DoL rule was that it didn’t apply to some 403(b) accounts. These are ‘retirement plans’ that apply to employees of public schools, and other not-for-profit enterprises like charities, churches, and foundations.

Know that your advisor may claim to be a fiduciary and acting in your best interest. And as such, that makes him/her a fiduciary. But also know his/her employer is NOT and if you subsequently have a problem, you may have to collect proven damages from the agent, because his/her employer is not bound to a fiduciary standard. Many agents are not technically ’employees’ but are instead independent contractors. The company in the background is further removed from accountability.

Oct 21, 2016 By Greg Iacurci

The plans in public school districts — often a “laissez-faire” type of arrangement exposing teachers to high-fee products — won’t be helped by the new regulation

Through its fiduciary rule, the Department of Labor is attempting to rein in conflicted investment advice and reduce costs for retirement savers.

However, there’s a corner of the retirement market plagued by the sort of high fees and sales practices the DOL is attacking that won’t be touched by the regulation: public school districts.

403(b) plans, a type of defined contribution plan for public schools, tax-exempt organizations and ministers, are notorious among advisers and industry practitioners as being a sort of free-for-all environment with multiple vendors, high-fee investment products and brokers who can camp out in a school cafeteria to try to make a sale.

“It’s almost laissez-faire,” Marcia Wagner, principal at The Wagner Law Group, said. “The teachers can be marketed by people who are very good providers to the marketplace and people who aren’t, and it’s a problem.”

Public K-12 plans aren’t subject to the Employee Retirement Income Security Act of 1974, and are therefore immune from the DOL rule, which raises investment advice standards in most retirement accounts.

When the rule goes into effect in April, brokers to ERISA retirement plans, such as 401(k)s, will be held to a fiduciary standard of care when providing investment advice for compensation. The same will not be true of brokers to non-ERISA plans, meaning it can be business-as-usual.

“It’s kind of like the Wild, Wild West,” according to Jania Stout, practice leader and co-founder of the Fiduciary Plan Advisors group at HighTower Advisors. “Teachers are really at the mercy of whoever’s sitting in the cafeteria they’re walking into that day. It could be a good representative. Or they’re trying to put them in a product that’s two or three times more expensive.”

403(b) plans for the public K-12 market aren’t the only non-ERISA plans. Plans among public higher-education institutions, government plans such as state and federal DC plans, and some church plans don’t fall under ERISA’s purview.

Aside from these cataegories, plans can also be structured to skirt ERISA by limiting employer involvement. Such plans, for example, can’t have an employer match. That’s how some private K-12 school districts are able to avoid adhering to the statute.

However, advisers and other industry practitioners say other types of non-ERISA 403(b) plans and governmental 457 plans don’t experience the same issues on a widespread scale.

“It is culturally unique to K-12,” said Joshua Schwartz, president of Retirement Plan Advisors, who works almost exclusively with non-ERISA plans.

Even though these plans are subject to state law, the tort bar hasn’t gotten very involved with litigation in this realm, Ms. Wagner said.

Non-ERISA 403(b) plans hold roughly 57% of the $900 billion in the 403(b) market, according to a joint report from the Investment Company Institute and BrightScope Inc.

Of course, not all public-school-district DC plans are plagued by poor investments and potential misconduct. But the way they’re set up, often with little employer involvement, creates an environment where abuses can thrive.

“What you have is technically an employer-sponsored retirement plan with no oversight,” Mr. Schwartz said. “As a result you have a range of business practices from the different providers, and you also lose any economies of scale.”

Some school districts have an “open access” arrangement, whereby they allow all interested vendors to offer 403(b) products, provided they meet certain criteria, according to a National Bureau of Economic Research report published in July 2015 that analyzed retirement plans among North Carolina school districts.

Indeed, it’s not uncommon to see 10 or more providers, and some districts have over 100, according to Mr. Schwartz. That could yield thousands of potential investment options.

Further, sales representatives sell products directly to employees at school districts, the report says, allowing for providers to enter into individual contracts with teachers. Contrast that with employers sponsoring 401(k) plans, who vet providers, serve as a central conduit controlling access to employees and whittle down a limited investment menu.

Such decentralized investing and record-keeping makes data difficult to come by. However, a 2010 report published by the TIAA-CREF Institute shows the sort of pricing disparity that occurs among “open-access” school districts.

In California and Texas, two “open-access” states, the average asset-based fee was 211 basis points and 171 basis points, respectively. By contrast, the average in Iowa and Arizona, two “controlled access” states that use a competitive bidding process to whittle down providers, was 87 and 80 basis points, respectively.

Variability among fees is greater, too — in California, roughly two-thirds of asset-based fees fall between 89 and 333 basis points. In Iowa, the range is between 50 and 123 basis points.

“What you tend to see is high-fee programs, frequently with surrender periods,” said Mr. Schwartz, who said investments tend to be annuities and mutual funds with sales loads.

In California and Texas districts, average back-end loads are 163 basis points and 233 basis points respectively; average surrender charges are a respective 419 basis points and 877 basis points.

“In any open-vendor environment, you’re establishing a competitive environment for selling, and not a cooperative environment” to help save for retirement, Mr. Schwartz said.

Even though the DOL fiduciary rule won’t directly affect these DC plans, the regulation could put pressure on employers, even if their plans aren’t governed by ERISA, to take them more seriously, Ms. Wagner said.

“This is like an area of pensions that’s been left behind, and we’re waiting for this inevitable groundswell [from the fiduciary rule],” Ms. Wagner said. “It could take time. And in the meantime, people could be hurt” by poor investments.

Retirement Planning Strategies for Clients in Their 50s

My Comments: If you are already retired, don’t bother with this. If you haven’t yet retired, there may be something here for you.

Waiting for retirement is like watching grass grow, or watching a car rust. You lose interest in a hurry. The problem is it’s going to happen, whether you pay attention or not.

Retirement is much the same for someone with many years left to work. But unless you die first, it will arrive. Count on it.

And when it does, it really helps if you’ve paid some attention to it along the way.

By Tahnya Kristina | February 23, 2017

No one knows how long they’re going to live. What we do know is that over the last 50 years the average life expectancy has increased. According to the World Bank the average life expectancy in 1960 was 70 and in 2014 it was 79. Thanks to medical advancements and the surge of healthy living awareness, people are living longer. That’s great for people, but it also means they need to plan for retirement savings to last longer – maybe longer than expected.

How does a financial advisor help clients plan for life during retirement? There are a lot of questions that need to be asked, including where will the retirement income come from to how long will retirement savings last? If clients have been saving, but not planning for retirement it’s never too late to get started. Here are three ways financial advisors can help 50-somethings plan for retirement.

1. Maximize Retirement Contributions

Ideally, this is the time in a client’s life when they are at their highest earning potential and that presents a big opportunity for retirement planning. With a high salary and low amount of debt (because the mortgage is paid off or close to being paid off) clients can take advantage of maximizing their retirement contributions.

If you’re in your 50s and have unused contribution room in an IRA, now is the time to take advantage. If employers offer a 401(k) plan, employees should increase their contributions to take advantage of any matching contributions. This will help boost retirement savings in the years leading up to retirement. Clients can also inquire if their employer offers non-registered group savings plans such as stock plans to help boost their savings and maximize their contributions.

2. Find a Balance Between Growth and Preservation

Retirement planning in your 50s poses an interesting challenge. On one hand, this age group wants to squeeze as much growth out of their investments as possible during the last of their contribution years. At the same time, they might now want to take a lot of risk with their accumulated retirement savings because in a few years they will need to live off the income. That’s where the assistance from a professional financial advisor comes in.

As a client’s planned retirement date approaches, it’s important to rebalance their retirement portfolio – or at least review their goals and asset allocation on a yearly basis to determine if rebalancing is needed. When 20-somethings invest for retirement they have many years to recover from market downturns. Unfortunately, that is not the case for retirement planning in your 50s. Reviewing investments to ensure clients are comfortable with the level of risk and the time horizon is still on track is crucial for successful retirement planning in your 50s.

3. Start Thinking About Lifestyle in Retirement

For 50-somethings retirement can be anywhere from five to 15 years away. The best way for financial advisors to help clients plan for retirement in their 50s is to ask clients to think about the lifestyle they want to have in retirement. The key to successful retirement planning is to be realistic.

Clients should consider factors such as where they want to live, if they want to travel, will they have dependents and how they plan to spend their time. From there advisors can create a retirement projection based on current and future savings, income sources and monthly obligations such as debt and living expenses.

Thinking ahead about estate plans and future tax brackets also plays an important role when planning for retirement in your 50s. These are all discussions financial advisors should have with their clients to help set realistic retirement goals and create an attainable retirement plan.

PS – I’m building an internet course called The SECRET(s) to a Successful Retirement. I’ll touch on all of this and dozens of other retirement planning issues, all wrapped in a convenient package that someone can reference year after year. Watch for it to be launched in the coming weeks. Tony