Posts Taged retirement

Ready for Retirement? Assess Your Retirement Readiness with this Handy Checklist

As you look forward to your retirement — whether it’s two years or two decades down the line — you’re probably considering how you can prepare yourself financially to enjoy each moment of your retirement days. After all, you’re working hard for that big break!

Many investors prepare for retirement by considering questions like: “How much money do I need per week?” and “How long will my retirement last?

These questions are important, but they don’t tell the whole story. For example, you might be able to pay your bills on a certain figure and save toward that target. However, if you haven’t budgeted for tee time, you’re never going to be able to recognize your dream of being the best golfer in your retirement community. 

In addition to crunching the numbers, take some time to run through this retirement checklist to see whether you’re heading in the right direction with your retirement planning.

Who?

Who do you spend the most time with in a day? Your family? Friends? Colleagues? A volunteer network?

Now, think about who you’ll be spending your time with during retirement. Does the lineup change or stay pretty consistent?

Also consider who will be part of your health and wellness team. Are you going to maintain strong relationships with family members who will be able to assist you when needed? And are you planning to participate in the care of another family member or close friend?

Your social network is as important in retirement as it is now. Look at ways that you can strengthen relationships and prepare for longevity in your family and social connections.

What?

Visualize your first day of retirement. What are you going to wake up and do? Cook an impressive breakfast spread? Spend time with your grandchildren? Read a book?

The activities you do today might influence the activities that you’ll pursue in retirement. After all, you’re still going to be the same person. That being said, you will have more time to pursue various interests in your retirement years. Which ones will you choose?

More importantly, how can you make changes today to help you live a vibrant retirement lifestyle that’s fulfilling and rewarding? Should you set aside funds for future travels? Are you interested in a hobby that you can get started with to some degree even now? Look into opportunities to invest time or assets in thoughtful ways for your future enjoyment.

When?

To some extent, you’ve probably already considered the question of when you’ll retire. If you haven’t, it’s important to get a firm idea of what age you’d like to retire at and start taking steps to achieve that goal.

Your retirement age and the number of years that you think you’ll be in retirement are some of the biggest factors in determining the magic number for your total retirement income need. 

Of course, age need not be the only factor in deciding a retirement year. Perhaps your asset level is a more pressing factor. If this is the case, simply adjust your retirement age to coordinate with the year when you anticipate that you’ll achieve the asset level at which you’ll feel prepared for retirement.

Where?

Planning your retirement “where” involves two parts: the location to which you wish to retire and the home that you’ll live in while you’re there.

Deciding on your retirement location can be tricky. Do you want to live close to family or in a destination you and your spouse have always dreamed about? Do you prefer an urban or rural environment? How about proximity to your favorite hiking trails or conservatory? Each investor will have a unique, very personal response to these questions.

Of course, budget should factor into your retirement location, as well. Some locales are inexpensive and offer a nice financial reprieve for those who have lived and worked in major cities for the bulk of their careers.

If you move, you might be able to comfortably settle into a home that’s grandkid-friendly for a fraction of what you would pay in your current zip code. But maybe you want to downsize anyway and location isn’t so important. Or perhaps you plan to live with family or in a retirement community instead of maintaining your own property during retirement.

Think carefully about how much time you want to spend “keeping house” during retirement when you decide on what type of house, condo, or community you’d like to retire to.

Why?

Research suggests that retirees who have a compelling “why” to their daily retirement lifestyle and routines stay healthier and more vibrant throughout their retirement. What’s your why?

When you’re not waking up every morning to head off to work, what will you be doing instead? Think about fulfilling activities, hobbies, volunteer work and travel that will enrich your retirement and give you purpose.

Planning your retirement isn’t something you can tackle in an afternoon. You might need to do some serious soul searching to paint a picture of the retirement lifestyle that will bring you joy and fulfillment.

As you determine the details of your retirement “who, what, when, where, and why”, your financial advisor can help you to connect the dots between the day-to-day retirement living you imagine and the financial resources that’ll help you work towards getting there.

To learn more about aligning your financial portfolio to help you pursue your dream retirement, contact Jake Sturgill today to schedule a consultation!

Thinking Retirement? Be Sure to Log These Important Birthdays​

Did you know that your birthdays become more important in the years approaching retirement? That’s right! Once you hit age 50, there are certain birthdays, also known as “legislative birthdays”, that indicate it’s time for you to take action on certain aspects of your retirement planning or that allow you to claim new financial benefits.

Let’s take a look at some important birthdays you might want to keep special track of.

Age 50

Your 50th birthday is the first where you can take advantage of certain retirement planning privileges. After you turn 50, you’re eligible to begin making “catch up” contributions to your retirement accounts, including the following:

  • 401(k) plans
  • SIMPLE 401(k) plans
  • 403(b) plans
  • 457(b) plans
  • Traditional IRAs
  • SIMPLE IRAs

 

Age 55

At age 55, should you decide to stop working, you can start to take contributions from an employer-sponsored 401(k) plan without incurring the 10% early withdrawal penalty for early withdrawal. Of course, if you don’t plan to retire at 55, you may choose instead to use this time to review your retirement plans and make adjustments as necessary.

Age 59 ½

After age 59 ½, you can take withdrawals from your 401(k) plan without incurring the extra 10% tax penalty for withdrawals, whether or not you plan to retire at this age. You need to consult your individual 401(k) plan to ensure that you meet the requirements for withdrawal at 59 ½.

Age 62

When you turn 62, you become eligible to take Social Security benefits. However, it may not be financially advantageous to begin collecting right after you turn 62.

You will want to wait until you reach full retirement age (FRA) if you want to maximize your Social Security benefits. Depending on your birth year, this age will vary; your financial advisor can help you to determine when it makes the most sense for you to start taking Social Security benefits.

Prior to Age 65

Three months before your 65th birthday, you will enter into a seven month window during which you are eligible to enroll for Medicare. By this point in time, if you’re already taking Social Security benefits, you may already be enrolled in Medicare. But if you’re not – or if you’re uncertain – it’s important not to miss this window.

Age 70

At age 70, you reach the maximum age for delaying your Social Security benefit. Even though you may not be ready to retire, you may want to consider your options for taking your Social Security benefit in order to receive the maximum benefit. Just remember, if you continue working and also take Social Security, you will continue to pay Social Security taxes on your taxable income.

Age 70 ½

For most investors, age 70 ½ is the age by which you must begin drawing the required minimum distribution (RMD) from your tax-deferred retirement accounts. Usually, you have until April 1 after you turn 70 ½, but it’s important to understand the requirements for your specific accounts.

If you’re approaching retirement age and have questions about planning your retirement timeline, a CERTIFIED FINANCIAL PLANNER™ can help you to stay on track with managing important dates and accounts. To learn more about your retirement planning options, contact Jake Sturgill today to schedule a consultation!

Plan Your Retirement with Longevity in Mind

There are two important questions that investors need to answer in regards to their retirement planning:

  1. How much money do I need to save? AND
  2. How long should I expect it to last?

Increasingly, investors need to consider even a third important question as they work through their retirement planning:

What if I live to 100?

As medical advancements improve quality of life and offer the potential to extend one’s longevity, there’s the very real possibility that individuals retiring today, next year, or within another few decades are going to enjoy longer, more active lives than generations before them. While this is great news for you and your loved ones, it adds some complexity to the retirement planning equation.

Accordingly, you should plan your retirement with longevity in mind. Read on to learn how.

It’s essential to plan your retirement with longevity in mind. Read on to learn how.It’s essential to plan your retirement with longevity in mind. Read on to learn how.Consider Your Retirement Age

Age is an essential factor to consider as you look toward your retirement plan. Not only should you think of the age you ideally wish your retirement income to hold out until, but you also need to consider the age at which you’ll retire. The individual who plans to retire at age 65 needs to account for many more years of retirement savings than the one who holds off until age 72.

You should also consider what your income will look like in the years as you approach retirement. Do you plan to work full-time at a day job and then launch straight into a full retirement? Or are you anticipating that you’ll have a gradual shift from full-time employment to part-time, and then a post-retirement hobby job that brings in some extra income on the side?

The employment-to-retirement mix looks different for everyone. However, if you plan to remain employed to some degree throughout even a few of your retirement years, you can offset the amount of money you’ll need to rely on from retirement investments during that time. This can help you to extend the life of your retirement savings and may be a longevity strategy to consider.

Hold Off on Claiming Social Security Benefits

Social Security benefits are a part of most investors’ retirement plans, but they aren’t the same for everyone. It’s important to have a good understanding of what your Social Security benefits might look like in order to plot the best course for the remainder of your retirement income needs.

One essential factor in determining the amount of Social Security income that you can rely on during your retirement years is the age at which you plan to start withdrawing your Social Security benefits. The longer you wait, the greater your month-to-month benefit will be.

Ideally, you want to wait until you achieve your Full Retirement Age (FRA) or possibly to the maximum of age 70 in order to take advantage of all that your Social Security investment has to offer. You can consult an FRA table to understand more about maximizing your Social Security benefit.

Evaluate Your Investment Mix

You don’t want to put all of your eggs in one basket when it comes to your retirement planning. A diversified investment portfolio can help to provide confidence as you move forward in your plans.

To plan your diversified retirement strategy, you should consider a variety of investment vehicles and strategies. Often investors will gravitate toward investments that offer certain guarantees or income benefits.  While these may be worthy of consideration, it is always important to remember that every investment has advantages and disadvantages and these products may carry additional fees, charges and restrictions. In the world of finance, diversification is important. Bear in mind that there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. 

Your financial advisor can provide personalized recommendations for diversifying your portfolio according to your income goals and risk acceptance. Additionally, they may have helpful tips for seeking to maximize your investments with the anticipation of longevity in mind.

Stay on Top of Your Expenses

It is never too early to begin preparing for the phase of life where you will either choose not to work, or be unable to maintain employment.  This is an inevitable event for almost everyone, but unfortunately many individuals fail to plan. Establishing good spending habits is one of the most basic, but also most significant steps that you can take as you think about retiring.  It is common for people to anticipate spending less in retirement, but learning new habits is extremely difficult. By controlling spending during your working years, it will make for a smoother transition to a phase of life where living within your means becomes even more critical. 

With this in mind, it’s important to plan for your retirement with realistic figures that represent your desired lifestyle, length of retirement, and set expenses you can’t avoid. You need a retirement budget that accounts for the dollars you will spend year-to-year so that you can build a retirement income that matches your expenses.

There are calculators and general rules of thumb that can help you to estimate an ideal retirement budget for your lifestyle and longevity plans. But when it comes to getting the best idea of what you as an individual will actually need for your future plans, it’s best to work with a financial advisor who can show you how your financial goals align with your retirement needs with longevity in mind.

Work with a Professional to Plot Your Course

Establishing a retirement savings plan isn’t a simple task. If you’re looking at popular financial resources, blogs, and free calculators to help you put the pieces together, you probably have a lot of questions.

You don’t want to tackle the task of retirement savings on your own. There are too many variables – including the longevity question – that complicate the planning process and challenge oft-repeated rules of thumb.

Don’t leave your retirement savings plans to your best interpretation. Instead, call on the aid of a professional financial advisor who can evaluate your specific situation and help you determine a course that makes sense for your desired retirement.

Your financial advisor will work with you to look at lifestyle factors, anticipated retirement needs, and your risk acceptance to give you some practical options for building a portfolio that’ll work to serve your needs once you hit your retirement years. The experienced advisor will even give you some practical pointers for considering retirement with your longevity in mind.

To learn more about how a CERTIFIED FINANCIAL PLANNER™ professional can help you work through your retirement planning, contact Puckett & Sturgill Financial Group today for a consultation!

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.

What are the Most Important Issues to Consider Before Retirement

When it comes time to plan for retirement, there’s a lot to think about before making the plunge. From your cash flow needs to insurance requirements and tax strategy, your finances are a central factor when answering questions like: “When can I retire?” and “How long can I expect my retirement to last?

As you prepare to discuss your retirement planning with your financial advisor, consider some of the most important issues that may influence your retirement goals and planning:

Anticipate Your Future Cash Flow Needs

In order to establish a retirement investing strategy, you need to know what you’re saving for.

First, you want to consider how your cash flow needs will change as you transition from full employment to retirement. Factors like your anticipated income and expenses will help you to determine your cash flow expenses from month to month and year to year.

Basic living expenses, such as housing and healthcare, will remain somewhat consistent throughout your retirement, though things like downsizing your home can influence whether these will remain similar to your pre-retirement expenses. Variable expenses, such as food, travel, entertainment, and taxes are more dependent on your lifestyle expectations and other plans, and are likely going to fluctuate from time to time throughout your retirement.

Your target savings goals for retirement should factor in both your expected basic and variable expenses. Ideally, your retirement portfolio should provide the supplemental cash flow that you need to sustain your anticipated standard of living during your retirement.

You will also want to consider how Social Security and pension benefits play into your retirement planning. Your financial advisor can help you to determine the optimal time for claiming your benefits and taking advantage of any for which you qualify.

Review Your Health Insurance Coverage and Future Situation

Another essential aspect of planning for retirement expenses is ensuring your ongoing health insurance coverage. For retirees aged 65 and older, Medicare is an option. If you plan to retire before 65, you’ll need to look into other options, like extending your health insurance coverage from your previous employer or your eligibility to save on premiums for a plan from the Health Insurance Marketplace.

Looking beyond your initial insurance coverage needs, you will also want to make plans for long-term care, should you eventually require it. Long-term care insurance, self-funded insurance, and assisted living programs can provide the path for funding your care needs and should factor into your retirement savings strategy.

Plan for Taxes

Taxes are an unavoidable part of your retirement planning and you should prepare an advance tax strategy to compensate for these expenses. If you anticipate that you’ll have a high RMD, look into possible Roth conversion strategies or charitable distributions, if you are inclined to use your funds in such a manner.

If your income will be considerably lower after retirement, then a Roth IRA conversion strategy may relieve some of your tax burden during those low income years.

Take Stock of Additional Situations that May Apply

Lastly, you want to take a look at other situations that may impact your retirement strategy and make a plan for handling them. These include things like:

  • Updating an old or outdated estate plan
  • Updating beneficiaries
  • Outstanding loans on employer retirement plans
  • Multiple accounts with similar tax treatment
  • A change of residence or house sale
  • Business ownership issues, including exit strategy and succession planning

Your financial advisor is the an ideal sounding board as you sort through retirement planning and other related issues. Not only can they offer practical advice for organizing your pre-retirement thought process, but they can provide the tools you need to make informed investment decisions to fund your future.

Contact Jacob Sturgill of Puckett & Sturgill Financial Group to learn more about our retirement planning services and start planning your future today!

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

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Ask David: How Do I Create Retirement Strategies?

When you’re looking toward retirement, there are plenty of considerations to make as you put investment strategies into motion. You, like many investors, are probably interested in learning how to make smart moves today in the hopes of building a solid nest egg for tomorrow.

But what are some ways to strategize for retirement?

Today, we’re talking to our very own David Hemler, MS, MPAS, CFP to learn more about some of the most important factors to consider when planning your retirement income.

Take Your Lifestyle Needs into Account

Before you plot a course for retirement investing, it’s important to consider your lifestyle, both your present preferences and what you anticipate your future to look like. If you’re married and plan to retire, you also need to take into consideration your spouse’s preferences when factoring your future cash flow needs.

For example, if you and your spouse enjoy activities with different cost factors, you need to reconcile the differences and make a plan that accommodates your combined ideal lifestyle. Additionally, you want to factor in your anticipated health and activity levels, as well as the length you desire your retirement to be.

Once you have these parameters in place, you can start to put together a plan that encompasses the future period of time that is “your retirement”. Factors like average costs of living can be a general guide, but the cost of funding your lifestyle is an important way to figure your retirement needs.

Start Investing as Early as Possible

The ideal time to start investing in your retirement is as soon as you start to earn income. For a majority of earners, this would put the beginning of retirement savings in their teens or early twenties. But even if this doesn’t apply to your situation, it’s never too late to start putting money aside for your retirement needs.

There are two factors that play into your retirement savings planning. The first is the amount of money you need to save, or your capital needs planning goals. The second is the compounding power of the money you’ve already set aside. When you have funds set aside from your first job or two -even a small amount -, that money can potentially earn more over decades of your career and put you closer to your goals.

Find a Strategy that Works for You

Retirement planning would be easy if there were a safe investment vehicle, like a CD, that guaranteed 6% or 7% in interest. Then you could take what you needed and would allow the rest to compound over time.

But in reality, these types of investments don’t exist these days and it can be difficult to predict what today’s investments will yield tomorrow. Instead, it’s much more important to put together a retirement strategy that suits your income needs and cash flow specifically.

Partner with an Advisor who can Help You put it all Together

This leads to the most important factor in putting together a retirement savings plan that can put you in a position to work toward your retirement income needs: working with a financial professional who can help you find the pieces you need to put it all together. When you meet with a financial advisor for planning your retirement needs, you need to work with someone who spends time getting to know you before ever offering any specific advice.

At Puckett & Sturgill Financial Group, we take the time to get to know our clients in order to provide the ideal recommendations for each individual’s retirement planning needs. If you’d like to learn more about our personalized approach to retirement planning, contact us today to set up an initial meeting!

Schedule Your Free Consultation

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