Broker Check

Planning for Income – Retirement & Legacy Planning

Planning for Income – Retirement & Legacy Planning

It’s the final quarter of your work life, you have worked hard, prospered and faithfully saved year after year whether the stock market was up or down. You are used to the routine and grind of your working life and profession in competitive society. The gut check thought occurs what it will be like to not only not be working anymore but to not be saving or accumulating savings for your future. The level of anxiety heightens even more when you realize you will begin to live off your savings and all the planning involved to properly structure your income and retirement. This gets your head spinning with other meaningful concerns about healthcare and taxes and other requisite planning for your loved ones.

Stop take 3 deep breaths and center your inner self…If that does not work here is a brown paper bag to breathe into, lol.

You will have to indulge my levity here, everybody with a work life of many years will go through this emotional process on some level. It is real, the epiphany of profound life change and entering a new phase of life. It is really counter-intuitive because we all save for retirement and know it is coming our whole lives, however that perspective changes as you near the day and actually make the transition firsthand. Now your youth is behind you, and your money is in front of you.   The converse of how you started your work life and profession; you worked hard for your money and now your money must work hard for you.

You can’t get your youth back and that is beyond my scope as a financial advisor, but I can help you plan your income and address all relevant financial and planning matters, and put able resources at your disposal to best navigate the retirement planning quagmire. There is no easy perfect solution or cookie cutter plan that works all the time for all retirees. Retirement planning is a process of budgeting and assessment of all available resources, risk, taxes, monitoring markets, trends and making adjustments to one’s plan when needed. There are many variables involved and there's also life going on, which can be unpredictable and have its own plan. Ergo sum every client and household has its unique circumstances, financial resources, and views on retirement and related matters such as risk and legacy planning. Some clients plan to continue to work at least part-time, or until they are no longer able (ie, semi-retire). The word Retirement has many different meanings among many different people.

Solving the puzzle..that is a lot of information to sort through! Indeed it is, and as just discussed there is no universal solution. But it is important that you plan for it. So when should I get started? Most experienced planners and advisors will tell you to begin initial planning when you are within 5 years of your retirement target date. This is what is referred to as the retirement “red zone”. It is the phase of pre-retirement and your final working days until you officially transition from the workforce.

If you are already in the red zone or meaningfully in the red zone do not panic if you have not done anything yet. You may be a bit behind on the planning curve and you’ll need to begin the process asap. And I would say if you are less than 2 years away from retiring you will need to pick up the pace meaningfully. And YES it does matter and can make a world of difference. The initial years of your retirement are the most crucial phase and are highly determinant in setting the financial tone of your overall retirement's level of success.  A meaningful planning oversight or one bad financial move with your savings in the early years of your retirement could be a painful and costly mistake that you could have been avoided with the right guidance and planning.

My Process and My Resources

The first thing you will want to do is a household budget and do some pro forma planning.  You will need to know your numbers and the minimal level of income you will need to comfortably survive and live. 

Next, you will need to inventory all financial resources you will have at your avail for retirement.   This may require some legwork, like a calling your HR office for current profit share or pension figures as well as projected figures and all options that will be available to you. You may also need to register on the SSA.gov (the Social Security Administration) site to get your latest retirement income data (most current Earning & Benefits Statement) for when you are looking to retire versus taking your social security income.  A lot of people do not know when they should take their SS income and I get the question often.  Again, there is no black and white correct answer, it often requires further consideration and deeper analysis, and what I call scenario planning.   You will also need to factor for inflation, taxes and healthcare costs.  These are all important data points in running various scenarios to determine feasibility and probability of success of a chosen course and plan.

Scenario Planning with MoneyGuide Pro

I have a powerful tool for this called MoneyGuide Pro that can run many various scenarios based on reasonable future assumptions and current financial data, inputs, and variables.  It can generate probabilities, helpful statistical data, and outcome scenarios based on these inputs and variables. The data and input variables can be manipulated to show you various outcomes and fact patterns.  You can then assess how those outcomes may be meaningfully impactful; particularly over the longer term when choosing a certain course of action.  

Running these scenarios are crucial to the planning process and they serve to generate important dialogue between me and my clients.   And the process ultimately leads to more intelligent self-assured choices and decisions after all pertinent facts, data and assumptions have been thoroughly considered and weighed.

The Day Arrives…

If you have done all of the above, you are happy, relaxed and confident in your future financially. Of course perhaps you are emotional as you are parting ways with colleagues, co-workers and professional relationships made and shaped over many years. But you know you have done the work and done your job to your best ability. Financially you have the resources to enjoy your retirement and now have the confidence of having a solid financial plan to begin your retirement. Life is good.