Unfortunately, it is common today for companies to force employees out before they are ready to retire. On top of that, according to the Social Security Administration, “A man reaching age 65 today can expect to live to age 84. A woman turning 65 today can expect to live to age 86.5.” Since many employees are forced out sooner than expected, there is an increase in the average life expectancy of adults, and a recession is in the near future, it is crucial to have a detailed and reliable retirement plan. There is a plethora of tools to help Americans nearing retirement. For example, you can use an online retirement calculator to estimate your retirement expenses and income to create a detailed budget. If you find yourself overwhelmed by all the online resources and want an expert to help you plan for retirement, consider hiring a financial advisor.
For many American workers, a main goal is to build their wealth for retirement by investing a lot of their savings in the stock market. However, as retirement nears, you have less time to recover from costly mistakes so it is important to reduce your exposure to risks especially as a potential recession is in the near future. If you have already saved enough money for retirement, do not jeopardize your glory days. Be smart with your money and invest in the time and effort to have a Lifetime Strategic Retirement Plan LSRP. A” LSRP” will initially determine lifestyle income needed to cover inflation increased cost expenses and will enable a income distribution plan to be sure one is using the right accounts to draw from at the right times to avoid sequence of return risk, tax risk and survivor protection risk.
Many retirees have a diversified portfolio filled with different retirement accounts and investments. However, it does nothing to just have a pile of paperwork with your various accounts and investments, and no comprehensive plan “LSRP” about how to best use them. You should have a detailed written retirement plan that explains what retirement accounts you should draw income from first. We have a client that runs an orchestra and she and her husband shared that “you can’t get the best sound with everyone using the same instrument. It takes different instruments to create the best sound output” I also think Jeremy Mellberg, author of “Your Retirement Alarm Clock Is Ticking: Do You Have a Plan?”, best explains this situation as “I often compare it to an orchestra that’s tuning up before a concert: The instruments are all there, but it’s just noise until the conductor takes the podium and indicates the right tempo.” A detailed plan will allow your instruments (retirement accounts) to stay in tune. Beyond that, your plan needs to include details about how and when you will claim Social Security. Even though you can start claiming Social Security at age 62, you can grow your benefits 8% each year that you do not claim until the age of 70. The key to keeping the maximum amount of Social Security benefit income is coordinating the tax planning with the Social Security income planning. Many Boomers are shocked when they learn that 50% – 85% of their Social Security income is subject to tax based on taxable formula rules that determine if benefits will be subject to tax.
As you near retirement, you will receive invitations from various financial professionals. This professional might be an insurance agent who thinks the market is too risky, or an investment advisor representative who might tell you they do not like insurance products while encouraging one to keep all their retirement savings in the market. Many of these professionals are biased, and it is beneficial to include different types of investments and insurance products in your retirement plans. According to Mellberg, “Keeping some stocks in your portfolio may help you deal with inflation down the road, and insurance products, such as annuities can provide guaranteed income for those who want more stability.” You want a financial planner who is licensed to offer both and that specializes in retirement preservation planning. A financial planner who will teach you how much less you legally need to pay in taxes during retirement versus a planner that doesn’t have a plan to address taxes – an advisor who will not only protect your retirement savings, but grow them.