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Retirement Checklist

Putting a retirement plan together can be complicated. It requires time and effort to effectively implement, monitor, and update your plan. However, having a solid plan in place can provide confidence for your future financial planning.

While getting started early on your retirement planning is ideal, you can certainly make a solid plan even if you’re coming into things a little later in the game. A smart approach to retirement planning is to get started as soon as possible in order to make the most of the time between now and when you plan to retire.

And the best part? You don’t have to do this alone. Your CERTIFIED FINANCIAL PLANNER™ practitioner can help you work through your retirement planning strategy and come up with a timeline and portfolio that make sense for your current needs, as well as your desired financial future.

As you prepare to start working with your advisor on your retirement planning, use the following checklist to organize your thoughts:

Define Goals

Before you know how much money you need to save, you need to know what exactly it is that you’re saving for. Retirement can be a nebulous concept until you start to put some numbers and specific plans into place for the period of time that is your retirement.

Here are some questions to ask yourself:

  • What does retirement mean to me? For some, retirement means spending more time with family. For others, it’s a long-anticipated time for traveling, starting a new business, or working with a charity.
  • How will I structure my days? Like it or not, your career is an integral part of your identity and many people often spend more time at work than at home. Whether you plan to slow down or start a new journey, your ideal retirement lifestyle is a huge factor in determining how much money you’ll need.
  • Have I determined a realistic retirement age? The ideal retirement age varies from person to person and can impact your ability to collect certain benefits, such as Social Security. Your retirement age, along with other factors, like your health and family circumstances, can also influence the expected length of your retirement.
  • Do I have a written plan? While you don’t need to have a formal written plan before you begin working with an advisor on retirement planning, look through your financial paperwork and locate a written plan if you have anything on hand.

Identify Expenses

Before you can decide how to fund your retirement expenses, you need to know the types of expenses you’ll have and how much to set aside for each. In some senses, your day-to-day expenditures may not change, but because your lifestyle may radically change during retirement, certain figures may be higher or lower than you expect.

Consider the following:

  • What are my essential and discretionary expenses? Essential and discretionary expenses are the combination of expenses that include the things you must have and pay for regularly (essential expenses) and those that you can live without or that will vary from month-to-month, year-to-year (discretionary expenses).
    • Essential expenses include:
      • Housing
      • Food
      • Utilities
      • Healthcare
    • Examples of discretionary expenses include:
      • Gym membership
      • Traveling
      • Dining out
  • Will I spend more on travel or hobbies once I have more time to devote to them? Answers to questions about your retirement lifestyle can help you to understand whether you’ll actually be able to devote your time to your travel and hobbies or whether other commitments will realistically require your time and attention.
  • Do I have any debt? If so, what kinds? Entering retirement with zero debt might be seem ideal but is not always a realistic financial goal.
  • How will my health insurance premiums change once I retire? Many retirees find the shift from an employer’s health insurance plan to Medicare or another health insurance option impacts their month-to-month expenses.
  • Should I stay in my current home or move? Another state might be more retirement friendly, with lower taxes or cost of living. You may also wish to downsize from the home where you raised a family to a smaller, more manageable place to live.
  • Have I thought about taxes? If you are retiring to a lower tax bracket it is important to take advantage of the tax savings on your retirement income.

Evaluate Resources

Do you know where your retirement income will come from? For most investors, this is the (no pun intended) million dollar question. Now that you’ve got an idea of your expenses and long-term financial commitments, it’s time to consider how you’ll fund your retirement lifestyle.

As you work through your retirement figures, take these factors into account:

  • When will I file for Social Security? You can file for Social Security as early as age 62 and as late as age 70. Filing before your full retirement age might result in a permanent reduction in your lifetime benefits, so plan accordingly.
  • When can I start collecting my pension (if applicable)?
  • Do I have annuities that provide income?
  • How much do I need to have saved in IRA’s, 401k’s, and investment accounts? Often, your investments will provide a significant portion of your retirement income. This is why it’s important to strategize your retirement needs and work backward to the present to determine how much you’ll need to save and which investments are ideal for your situation.
  • Am I saving enough per year? Many studies suggest individuals need to save 10%-20% of their gross income each year, including amounts saved from personal deferral and any company match.
  • Do I have a plan for converting investments into an income stream? In most cases, you want to prepare your retirement plan with longevity in mind. However, there are some risks to outliving your benefits. This is a particular issue for pension holders, so if you do qualify for a pension, ensure that you have alternate retirement income to cover the gaps, should they arise.

Dealing with the Unexpected

Retirement investing is contingent on balancing risks. There are plenty of unexpected circumstances that may arise between now and when you’ll begin drawing your retirement income.

Consider these risk factors that have the potential to impact your retirement planning:

  • How will I manage unforeseen market shocks? You can’t predict how markets will behave over the next decades and when your retirement income depends on a certain level of stability, you could risk your future returns if you need to dip into your underlying investments.
  • Do I have a plan to combat inflation? Inflation erodes your purchasing power. That means your dollar today won’t be worth as much in the future and it’s important to plan accordingly.
  • Do I have all the insurance I need? Your insurance needs can change as you transition from working to retirement. Look into how these changes can influence your retirement insurance needs, as well as how your month-to-month expenses will be impacted.
  • Should I purchase long-term care insurance? Long-term care insurance is a safety net to protect your assets should you require extended care at any point during your retirement. Your health history and family factors can influence your decision to purchase long-term care insurance.
  • Do I have an adequate emergency fund? It is typically recommended to have 3-6 months’ worth of living expenses readily available as cash for emergencies. You may need (or want) more in retirement.
  • Do I anticipate any major one-time expenses? There are some one-time purchases that come up from time to time in life – retirement is no exception. If you anticipate some of these larger purchases, such as home repair or college tuition, ensure that you account for these expenses in your retirement planning.

Steps to Take Today

Before you take the leap to retirement, there’s some work to do. But with careful planning, you can create a retirement plan that should ideally be flexible enough to accommodate your retirement lifestyle and expenses.

Here are some steps to take today:

  1. Simplify your portfolio. Consolidate your accounts to make sure you have a clear and accurate picture. Ensure that your assets are invested properly and that your investments make sense for your values and can help you pursue your goals for your financial future.
  2. Prior to retiring, try to live on your projected retirement budget for several months. It’s a good idea to practice a new budget before committing to it full-scale. You may find that you spend more than you think you will and need to make adjustments. There are likely places where you’ll find cost savings and added expenses that you didn’t anticipate in advance.
  3. Don’t be shy about asking for professional advice. You’ve probably never retired before. It’s natural to not know everything about this transition, so find someone who can guide you through the process. A CERTIFIED FINANCIAL PLANNER™ practitioner can help you to prepare for your retirement by thinking through your future needs and identifying savings methods and investments that are suitable for your need.

If you’d like to learn more about preparing for your retirement, contact Jacob Sturgill for a consultation today!

This information is not intended to be a substitute for specific individualized financial or tax advice. We suggest that you discuss your specific financial or tax issue with a qualified advisor.

Should I Set Up a Traditional 401(k) for my Business?

When you are a small business owner interested in offering a retirement plan for your business you have plenty of options to choose from. 401(k) plans are one of the many ways in which small business owners can help themselves and their employees save for retirement.

However, 401(k) plans are not the right answer for every employer, nor are they ideal for every employee.

Is a 401(k) plan right for your business? Consider the following factors when reviewing your company’s retirement benefits package.

How Many Employees Does Your Business Have?

The good news is there are plans for business of every size. If you have employees, consider if you are willing to contribute to your employees’ accounts. Employer contributions are tax-deductible from current taxes; some plans give more flexibility than others in regards to these contributions while others do not require an employer contribution at all.

What are Your Primary Goals?

When you consider offering a retirement plan for your employees, it’s important to think about what you would like to accomplish and what is most important to you.

Are you looking for a retirement plan that allows for flexibility in plan rules and employer contributions? You may find that that a 401(k) plan meets your needs, since this plan allows you discretionary employer contributions, as long as they fit within certain parameters. 401(k) plans also have higher contribution limits than many other plans and can be a great fit if your goal is to save as much as possible for your own retirement.

If your main priority is finding a retirement option that is easy to set up and administer, a 401(k) plan may not be the idea retirement option for your employees. Depending on the number of employees you have, how much they earn, and the contributions you’d like to make, you may consider a SIMPLE IRA or SEP IRA as alternatives.

Have You Considered Alternative Retirement Investment Options?

Even if you think that a 401(k) plan is the ideal investment option for your business, you may want to consider other retirement investment options before making a final decision. Here are some other retirement options you might want to think through:

  • Solo 401(k) – Easier to set up than a 401(k) plan and can be ideal for a solo entrepreneur; contributions cannot exceed the lesser of 100% of compensation or $56,000
  • Defined Benefit Pension Plan – Can be flexible for the older solo business owner or employer who wishes to contribute a mandatorily set amount for employees’ plans
  • SEP IRAs – One of the easiest plans to administer; contributions cannot exceed the lesser of 25% of compensation or $56,000
  • SIMPLE IRA – Easy to set up and administer; employee contributions cannot exceed $13,000 and require mandatory employer contributions of 2%-3%
  • SIMPLE 401(k) – Similar to a SIMPLE IRA, but offers the loan options of a 401(k) plan
  • Safe Harbor 401(k) – Another option that is easier to set up and administer than a 401(k); employee contributions cannot exceed $19,000 and require mandatory employer contributions of 3%-4%

To learn more about your business’s retirement investment options, contact Certified Financial Planner, Jacob Sturgill, for a personalized approach to uncovering your retirement investment priorities and to review your potential options.

For Plan Sponsor Use Only – Not for Use with Participants or the General Public.
This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Portfolio on Purpose

Behavior Gap Illustration - Puckett & Sturgill Financial Group

When you look at your investment portfolio, do you know why you own what you own?

  • Does it look like the picture on the left, an eclectic mix of things accumulated over the years?
    OR
  • Does it resemble the picture on the right, with each piece intentional, organized, structured, well thought out?

 

If you’re like many people, your portfolio looks more like a collection – it has a little bit of everything in it. These bits and pieces might include inheritance, something you invested in after read about it (or saw it on TV, heard a tidbit from co worker), last years hot performer, and so forth.

In a purposefully designed portfolio, each piece of your portfolio should work together. The goal is not to beat “the market” (after all, what is the market anyway?), but for each piece to work in unison to achieve your goals.

Because your investments will eventually be used for something, you may believe the logical thing to do is start with viewing your investments in isolation. But you run the risk of hurting yourself in the long run.

Instead of viewing your investments myopically, it’s important to see the whole picture. You want to look at your investments as a means to an end, rather than the end in and of themselves.

Sounds easy enough.. How do we do it? First, start with end in mind.

DO: Prioritize Your Ideal Financial Future (Clarify Goals)

  • Give yourself permission to take your best guess at your financial goals. For example, your favorite artist, movie, etc has likely changed throughout your life. Your idea today of your financial future may be different than what you ultimately end up prioritizing.
  • If you start with a desired end point, it becomes easy to work backward to figure out what you need to do for your financial portfolio today.
  • This can be very challenging. How do you know what is important to you? “They” say the checkbook and the calendar never lie. Start with your daily reality today and work from there.

DO: Develop a Plan

  • Set realistic expectations for your portfolio performance.
    • How much do you think you will need?
    • How much can you reasonably save?
    • When do you need your money? (i.e. what is your time-frame?)
    • What rate of return do you need?
  • While market performance is important, market performance should not be the ultimate goal – achieving your desired financial state should be.

DO: Find the Investments that Fit Your Plan

  • Revisit your portfolio periodically (at least annually) and make smaller changes to it over time.
  • If you know where you are going, it’s easier to know what it is going to take to get there. Think of going on a road trip; you know you’ll need to gas up at some point – but you probably don’t know which exit you’ll actually need to stop at!

Choose a Financial Advisor Who can Help

We are all human. Life happens. Things change.

There are always going to be things that seem like better options or bigger risks in the market. Sometimes it seems like one of these factors could jeopardize everything and you may be tempted to make changes.

Blind spots are, by their very definition, things we cannot see. A trusted advisor, like Jocob Sturgill, can help you clearly define your goals, set realistic expectations, sidestep common investment mistakes, and build intentional investment portfolios.

Contact Jacob Sturgill

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risk including loss of principal.

Goals and the Plan to Reach Them

Financial Planning - Puckett and Sturgill Financial Group

“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where–” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“–so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”*

When it comes to your financial picture and long-term goals, do you find yourself wondering as Alice did in Lewis Carroll’s “Alice’s Adventures in Wonderland”?

If you are like most people, you probably have a number of financial goals but no real plan to achieve them. What should you do when your objectives compete? Where do you turn for answers? Perhaps you’ve turned to friends, the internet, or popular voices in finance for answers, but you’re still not sure you’re on the right path.

A CERTIFIED FINANCIAL PLANNER ™ practitioner can help you connect your investments to what is most important to you and in the end, can help you make better financial decisions. Here’s how:

Your Financial Advisor Should Ask the Right Questions

Money is an emotional topic and talking or even thinking about it can be hard. Very hard.

In order for your financial advisor to help you make informed decisions with your money, you will need to share important personal information about yourself and your family. This conversation also requires a transparent assessment of your current financial situation. Moving beyond your assets and liabilities, your advisor should clarify what it is that you want to accomplish both personally and professionally as well as who and what is important to you, what you would like to accomplish as well as when you would like to accomplish it.

Modern financial planning is a continuous and evolving process; it isn’t about one-off transactions or products as it might’ve once been or is sometimes perceived to be but is about a relationship with a professional advisor that will help you get from where you are to where you would like to be.

Your Financial Advisor Should Customize a Plan that’s Uniquely Yours

After the gathering information stage, your financial advisor should have a clearer picture of your unique situation and work with a team of experienced and trusted professionals such as CPAs and attorneys to develop a comprehensive plan that addresses your objectives.

In this way, your financial advisor works like an architect to design a financial home that suits your current needs as well as your plans for future self.

But it takes a clear understanding of investment options as well as an understanding of each clients’ individual financial situation before jumping into the investment deep end. One size certainly does not fit all when it comes to investing.

Like a scientist, your financial advisor will put the “things” under a microscope and analyze each factor critically before developing a plan to move forward. Just because something looks good on paper or is recommended by a popular finance blog doesn’t mean it’ll work for you.

Your financial advisor knows this and will spend time experimenting with potential combinations before delivering a cohesive financial recommendation for your future.

Before you decide to implement any part of an investment plan, you want to find an advisor whose set of investment beliefs, methods, philosophies, and thoughts on markets resonates with you.

Your Financial Advisor Should Offer Ongoing Advice and Recommendations

Once your advisor has a designed a personalized financial plan for you, it’s time to get to work.
After all, your financial advisor is there to do just that: advise.

From an early age, we are taught that the quickest way to get from point A (where you are today) to point B (where you want to be in the future) is a straight line. In some sense, your initial plan shares the element of a straight line. However, life, like the markets, rarely moves in a linear fashion. This means that at some point your initial plan will need to be changed and you should both know and be OK with that. We won’t know the cause – the who, what, when, where, or how – but as Heraclitus once said: “change is the only constant”.

What you should have with your financial advisor by now is a relationship. Relationships take time to build and are built on trust. Like any relationship, they are built on honest, regular communication and from time to time, a little work.

How does your financial advisor check out? Does he or she understand your goals and lifestyle, analyze the components critically and offer a custom financial plan for your future?

If not, don’t you deserve a financial advisor who can do these things for you? After all, it’s your money and your financial goals on the line.

Start setting your long term goals with the advice of Certified Financial Planner, Jacob Sturgill

*Carroll, Lewis, 1832-1898. (2000). Alice’s Adventures in Wonderland. Peterborough, Ont. :Broadview Press