13 Wealth Management Issue #4: Retirement Planning

It is often said that there are only three primary engines to power the achievement of any final goal. In our previous blog entries, we covered these primary drivers of financial goal achievement, Investment Planning, Risk Management & Insurance Planning, and Banking and Credit Management. Today’s 13 Wealth Management Issue: Retirement Planning, certainly involves a number of variables, but Retirement Planning leverages all three of the previously identified Wealth Management Issues.

Retirement Planning

Number 4 out of 13 in our Wealth Management Issues Series

Let’s face it, for many of us, Retirement Planning IS Financial Planning. They are one-in-the-same. This is the number one issue in the minds of our clients.

When considering Retirement Planning, we find our clients to be in 1 of 4 distinct phases on the retirement journey. You are either in the Accumulation phase, Transition phases, Utilization phase, or Transfer. These stages are generally defined by age and health of our clients. Those clients who are early and mid-career are in the Accumulation phase. This is primarily the savings phase and it lasts until around age 55. From age 55-65, we begin to make full preparations for your retirement and help you gather various savings plans you’ve started along the way and help you sift through important Social Security decisions. On the other side of this triangle, are the Utilization and Transfer phases. Here we help clients adapt to living within their planned budget while living your fullest life that you have earned and for which you have planned. Finally, we help ensure that family and future generations receive any remaining retirement benefits available to you, plus help you establish a legacy should that be your intention.

No two retirement plans are alike. Like people, retirement plans are individual and deeply personal. Regardless of the stage in which you may find yourself, there are 4 common questions or risks that often weigh on the minds of my clients. Depending on the stage, the answers will be a little different, but these are the issues that often keep retirement savers and retirees up at night. Let’s explore each of these.

Risk Factors of Retirement

These risks pertain to Longevity, Inflation, Long-term Incapacity, and Sequence of Returns. In addition to the risks, here are the common questions that we hear our clients ask every day and help them address:

  • Longevity: How long should you plan to save? How long will you live? Will you outlive your money? How much will retirement cost?
  • Inflation: How will the inflation rate to change when you retire? What can we expect? How will this affect your nest egg?
  • Long-Term Incapacity: Are we prepared for an unexpected illness? Healthcare costs? Living at home? What type of assistance is preferred & affordable? If you require long-term care, what costs should your family expect?
  • Sequence of Returns: What is the withdrawal rate? When should you begin to draw upon Social Security? Is waiting best for you to reap the higher payout from Social Security? What tools are being used to assess likelihood of success? What happens if you do not need to use some of your retirement money, but the law dictates you need to take distributions?

These are the most common concerns and risks we hear from clients everyday regarding their Retirement Planning. Have you adequately considered these risks and how these may impact your retirement planning? Often, we’ve noticed that people will spend more time planning a trip next year than they will planning out a twenty or thirty-year retirement. It certainly is more fun to think about that vacation and after spending some time discussing your vision for retirement, you will find you have more confidence when pondering that next vacation because your retirement plan is in good hands.

With life expectancies increasing and some individuals wanting to retire early, the need for a sound retirement plan is crucial. We must examine the results of using distributions from the plan during life versus distributing to descendants at death. There are many issues to consider including timing of distributions, taxation – income & estate, as well as the degree of control preferred. The risks and concerns we’ve presented are the most common, perhaps you have additional concerns and we can help ease your mind. You’ve worked hard to save, so let’s plan to help you make the most of your retirement.

Hopefully in this short entry you are able to discern how important implementing a disciplined process with collaboration with CPAs and attorneys will be to you and your retirement.

When considering these issues, it’s important to ask yourself, how do any of these affect you, your family, and your goals? The following installments will cover each of these Wealth Management Issues in greater detail. Our hope is this series of chapters will provide not only an educational forum but also promote thought, leading to action…in a holistic manner, of course. Learn about our other 13 Wealth Management Issues here.

Watch our Whiskey & Wealth Wednesday video of this article:

If you would like to learn more about this subject please contact us and we’ll be happy to help.

By Anthony C. Williams, CWS, ChFC, MRFC, CLU | Investment Advisor Representative | President & Founding Partner of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.