Posts Taged retirement

Tax Considerations for the Retiree – Qualified Plan Issues

Now that you’ve worked through your family and filing issues, as well as your investment income and other issues, it’s time to take a look at the last category for tax time consideration: qualified plan issues.

Qualified plans often play a large part in the retirees income equation, so it’s essential to properly account for distributions taken throughout the year. Additionally, each account type carries slightly different rules, so you want to stay on top of when you can begin distributions from one account or what your distribution requirements are for another.

This article is third in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


Here are some questions to ask as you approach your qualified plan issues this season.

Are You Above Age 70 ½:

  • With an Inherited IRA?

    Ensure that your RMD has been met and reported (Form 1040, Lines 4a and 4b).
  • And Have Completed a Qualified Charitable Distribution?

    Double check that this amount if properly accounted for and that the amount is excluded on Form 1040, Line 4b.


Did you Fail to Take the Required Minimum Distribution?

Your Required Minimum Distribution is the minimum amount of money that you should withdraw from your retirement account(s). If you failed to take the RMD, you will need to pay a penalty, which can be calculated on Form 5329 and carried over to Schedule 4, Line 59.

Have You Made a Non-Deductible IRA Contribution?

Look at Form 8606 for more information about your non-deductible IRA contribution. Then, ensure that the cost basis for this contribution is properly tracked.

Have You Taken a Non-Qualified Distribution from a 529 Account?

If you took a non-qualified distribution from a 529 account, you’ll need to pay the penalty on the withdrawal amount. File form 5329 to account for the penalty and then carry it over to Schedule 4, Line 59. Your tax professional can provide personalized guidance if you want to understand more about whether your 529 distribution(s) is qualified.

Did You Withdraw from a Non-Deductible IRA?

You can use Form 8606 to ensure that the taxable and non-taxable portions of your distribution were calculated correctly.

Did You Convert Funds from a Traditional IRA to a Roth IRA?

Conversion of funds from a traditional IRA to Roth IRA can impact your bottom line at tax time. Use Form 8606 to report the converted amount and to ensure that non-deductible IRA contributions were converted and treated as non-taxable. If you made any conversions of this type, you’ll want to enlist your tax professional in assisting you to calculate this properly.

Have You Rolled Retirement Funds from One Account Type to Another?

Similarly, if you’ve converted retirement funds from one account type to another (ex. Moving funds from a 401(k) to an IRA), you want to ensure that this is reported and calculated properly. Ensure that funds are treated as a rollover and not as a distribution by double checking that Form 1040, Line 4a displays the rollover amount. Meanwhile, Form 1040, Line 4b should show $0.

Did You Rollover Retirement Funds and Utilize NUA?

If yes, you will need to review Form 1040, Lines 4a and 4b to see that your IRA distributions are recorded and to ensure that the basis was taxed.

These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the retiree, see our posts on family and filings issues, as well as what to do about investment income.

This article is third in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


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

Tax Considerations for the Retiree – Family and Filing Issues

As tax season approaches, it’s time to take a look at your 2019 tax strategy. Thankfully, if you filed taxes in 2018, you can use your 2018 return as a sort of cheat sheet to help you get a better idea of what you may be responsible for this time around.

Whether you’re dealing with a fixed income, investment payouts, or any other unique financial situations, your status as a retiree means you have some different considerations to make than you did as a working individual. To start, you will want to take a look at your family and filing issues.

This article is first in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


Did You Take the Standard Deduction?

Did you claim the standard deduction of $12,000 ($24,000 married, filing jointly) in 2018? (Consult Form 1040, Line 9) If so, you may want to consider bunching charitable contributions into one year and look into ways to accelerate certain expenses, such as your property taxes.

Are You Married?

Your marriage can have some tax benefits — though in retirement, there can be some complicated factors to filing jointly. Do any of the following apply?

  • You have a large disparity between your and your spouse’s incomes
  • You can claim large, itemized deductions
  • You have an income-based student loan


If you answered “yes” to one or more of these scenarios, you may wish to prepare a return as married filing jointly alongside a return as married filing separately to see whether one of these statuses provides a greater tax advantage.

Have You Been Divorced or Lost Your Spouse?

If you’ve experienced a divorce or death of a spouse, you need to review your filing status. Look at the top of Form 1040 to see whether you’re filing correctly.

If you entered into a divorce agreement in 2019, after the first of the year, alimony is not taxable for the recipient. If your agreement began before 1/1/19, alimony is deductible by the payer (Schedule 1, Line 31a) and taxable to the recipient (Schedule 1, Line 11).

Did You Have Any AMT?

If you paid AMT in 2018, you may want to consider strategies to reduce it for this tax year. Strategies like minimizing large capital gains and lowering income by maxing out retirement contributions can help. If you paid a large amount of AMT in 2017, look at Form 8801 to determine whether you received a credit for this payment.

Do You Have Certain Age or Disability Factors?

If you and/or your spouse are over age 65 and/or if you or your spouse is legally blind, you may be eligible for a deduction of $1,300 for each married taxpayer ($1,600 for each unmarried taxpayer).

Did You Have Any Tax Surprises in 2018?

If your 2018 tax responsibility was much higher or lower than you thought it was going to be, it’s important to check into what caused the change and whether that factor will impact your tax responsibility this time around. For those who experienced a higher refund, look to see whether you had a unique situation by comparing your taxable income from the past two years’ returns. On the other hand, for those who didn’t withhold enough for tax time, look at Form 2210 to review the penalty and determine your current tax liability for that amount.

These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the retiree, stay tuned for information about reporting your investment income and other issues.

This article is first in a series on Tax Considerations for the Retiree. Read of the series here:

  1. Tax Considerations for the Retiree – Family and Filing Issues
  2. Tax Considerations for the Retiree – Investment Income and Other Issues
  3. Tax Considerations for the Retiree – Qualified Plan Issues


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

Considerations for Married Couples Claiming Social Security Benefits

If you are a married couple approaching retirement, no matter how long you’ve been married, you’ve weathered both great joys and storms. To best enjoy each other’s company in your retirement years, it’s essential to have a holistic retirement plan. And if you’re like most American couples, one important aspect of your joint retirement plan is the use of Social Security benefits.

Today, we’re going to address some of the top considerations for married couples claiming Social Security benefits.

When Should I Start Collecting Social Security Benefits?

Timing plays a big role for couples when they are planning to start collecting Social Security. Waiting to collect benefits until you reach your Full Retirement Age (FRA) can make a big difference in the amount of spousal benefits that you can claim. Your financial advisor can help you to determine the optimal time to begin claiming Social Security benefits.

How Does Circumstance Impact the Benefits I can Collect?

All couples arrive at retirement with a unique set of circumstances that must be taken into account in order to maximize benefits through their timing. Here are some common situations to consider:

Long Life Expectancy and Even Incomes

If both you and your spouse have a long life expectancy and have maintained similar yearly earnings throughout your careers, a strategy that involves waiting as long as possible before claiming could help you to maximize your Social Security benefits. In general, the longer you wait to claim your benefit, the better the payout.

Long Life Expectancy, Uneven Incomes

In the case that both you and your spouse are planning for long life expectancies, but one of you has earned significantly more than the other, the higher-earning spouse might delay their collection while the lower-earning spouse collects their own earned benefits. Once the higher-earning spouse has begun collecting their benefits, the lower-earning spouse may switch from their own benefit and apply for spousal benefits instead. 

Other Circumstances

There are, of course, other combinations of life expectancy and income comparisons to consider. In some cases, it makes sense to begin collecting Social Security benefits immediately at age 62. In others, a delay is advisable. As always, your financial advisor is the best person to ask in regards to how your unique circumstance impacts your when to claim benefits.

What Other Factors Might Impact my Claim and Benefits?

There are other factors that influence when and how you and your spouse should claim Social Security to maximize your benefits. 

Updates to “File and Suspend”

You may have heard of the “file and suspend” strategy where the higher earning spouse waits to collect their benefit while the lower earning spouse cashes in on the spousal benefit. If you’ve considered this strategy for your own filings, you’ll likely need to think again.

In November 2015, Congress passed the Bipartisan Budget Act, which got rid of the potential for the higher earning spouse to “file and suspend.” Unless you and your spouse were born before 1954 or turned 62 before 2015, this option is off the table.


Depending on your income during retirement, you will have to pay taxes on your benefits. A formula that determines your Provisional Income (PI) determines the level of taxable Social Security benefits you are receiving.


Your healthcare, which may include Medicare premiums, may be taken out of your Social Security benefits. Depending on the Medicare plan and other healthcare expenses you have, this can affect how you plan your Social Security benefits collection.

Government Employment

Lastly, if you or your spouse are/were employed by a governmental organization, your Social Security benefits (both from benefits you earned or spousal benefits) can be reduced to reflect the pension you receive or for not paying Social Security taxes as a government employee.

Bottom Line: Your Situation is Unique

There are so many factors that contribute to you and your spouse’s optimal time for claiming Social Security benefits. Thankfully, you do not need to navigate these waters on your own! Our CFP® professionals know the questions that need to be asked in order to get you on the right track to get the most out of your Social Security benefits.

To learn more about retirement planning and Social Security, contact us today for a complimentary consultation!

Leaving Your Employer? Here are Some Options for Transitioning Your 401(k)

If the end of the year brings some big changes, like a promotion or new job, you might have some financial homework to do before you make the change. When you leave one employer for another (or to go into business for yourself), you have options for transitioning your 401(k). After all, the investment is the result of your savings over the time you spent with your employer.

Here are some options available to you when transitioning your 401(k):

Option 1: Keep Your 401(k) Where it Is

In some situations, you may be able to simply leave your 401(k) where it is. Depending on your employer’s policy or specific plan, you may be able to leave your 401(k) indefinitely.

However, this may not be ideal. If you find yourself moving to a new company every few years or so, it could become confusing to leave 401(k)s behind you at every former employer. Additionally, you may find it better to utilize the money for other investment purposes, rather than leaving it sit where you have it.

Option 2: Rollover Your 401(k) to an IRA

A popular choice for handling an old 401(k) is to roll it over into an IRA. This option allows you new opportunities for investment and provides tax incentives that protect your funds.

If you have multiple 401(k)s that you need to consolidate, rolling them into an IRA could be ideal for your situation. You can open one account and dump all of your old 401(k)s into it, bringing some welcome simplification to your retirement savings.

Option 3: Move Your 401(k) to a New 401(k)

You may have the option to move your old 401(k) into a 401(k) offered by your next employer. In this case, you gain the benefit of keeping your funds in a single account, rather than juggling two (or more).

If your new employer has awesome 401(k) benefits, you may find it advantageous to move your old 401(k) into your new one. Additionally, you can make this switch without taking a tax hit, making it a potentially appealing option for consolidation.

Option 4: Cash in Your 401(k)

There is, of course, the option to cash in on your old 401(k). This isn’t typically a popular route, since there are significant fees associated with cashing in early on a 401(k) — even one from a previous employer.

In some cases, though, the benefits of cashing in outweigh the negatives. Only you and your financial advisor can know for certain whether this option is best for your 401(k).

Deciding how to Handle an Old 401(k)

When you’re handling your retirement accounts, it’s important to view each investment as part of the bigger financial picture. The actions you take today can have impacts that last well into your retirement years.

If you want to learn more about using 401(k)s as part of your retirement plan, contact Jake Sturgill today to schedule a consultation!

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

How to Check on your 401(k) — And Why You Might Want To

Investing would be pretty easy if you could invest once and trust that your investment would perform exactly how you wanted it to. Of course, that’s not how investing actually works!

Over time, it’s important to check in on your investments and monitor their performance. This is all part of preparing for your financial future. If you neglect an investment for any length of time, you might find that it hasn’t performed the way you’d planned and it could set you behind.

Here’s how to check on your 401(k) — and why you might want to do so sooner rather than later.

Locating Old 401(k)s

Throughout your career, you may have participated in multiple 401(k)s through your various employers. If it’s been a while since you’ve checked in on one or more old 401(k)s, you need to contact your former employer(s) to get information regarding your investment. After all, it’s your money!

Once you locate a 401(k) from a past employer, you will likely have four options and may engage in a combination of these options

  • Leave the money in your former employer’s plan, if permitted
  • Roll over the assets to your new employer’s plan, if one is available and rollovers are permitted
  • Roll over to an IRA
  • Cash out the account value

Your financial advisor can help you to understand the advantages and disadvantages of each option.

It may not take more than a few quick calls to HR and various investment companies to locate your old accounts. But there’s the possibility that the investment company that your employer used has since been purchased or had another change of identity and requires a bit of a deeper dive to find your important info. In this case, you may be able to contact former colleagues to learn where to look or you can consult a national registry to locate your specific 401(k). Your financial advisor may have some advice in navigating this search. Additionally, your financial advisor can help you consolidate old plans so to facilitate managing them in the future.

Balancing Your 401(k)

Your 401(k) is likely comprised of mutual funds. Your 401(k) statement should have a breakdown of your investments and the returns from each.

Over the life of your 401(k), you may determine that one or more investment types aren’t the best option for reaching your financial goals. If this happens, you’ll want to rebalance your 401(k) investments to reflect a blend that more accurately captures your risk acceptance and investment objective. Making rebalancing decisions can have a substantial impact on long-term performance both positively and negatively.  It is very important to seek professional advice before making these types of financial decisions. 

In addition to balancing the investment portion of your 401(k), it is also wise to examine the tax choices offered in your employer sponsored plan.  Many 401(k) plans today will offer employees the option of choosing between Traditional or Roth contributions. Your selection between these two options will determine the current taxation of your contributions and the taxation of the income you draw from the plan in retirement.  The difference to your retirement income stream can be huge, so don’t take this decision lightly and get professional help.

Why Check on Your 401(k)?

It is easy to get caught up in life and lose track of what’s happening with your 401(k).  For many of us, our 401(k) will likely be the largest asset available to create retirement income, yet despite the importance, it can be out of sight and out of mind.  If you aren’t managing and maintaining this asset with care, then you might be missing opportunities or falling behind your goals.

Sitting back and letting your 401(k) — or any investment for that matter — take on a life of its own isn’t a solid investment strategy. Staying engaged with a financial advisor is one way to avoid falling into the trap of complacency. 

If you’d like to learn more about understanding your 401(k)s or balancing your retirement portfolio, contact Puckett & Sturgill Financial Group for a consultation!

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 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.


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.


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.


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.


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


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.