Wise Money Retirement

One of the primary goals of retirement planning is to figure out how to use your retirement assets in the best way to generate the income you'll need after you stop working. But to do this, it is important to have a pretty good idea as to the amount of income you'll actually need. Estimating this is not a simple matter because there are so many things to consider. How much income will you need to pay your bills and essential living expenses? What amount do you want to spend for travel, pursuing hobbies and living your retirement dreams? How might your needs for income change over time as you age? What rate of inflation should you assume in your planning? These and other factors mean that the exact amount of income you'll want to try to plan for is not static. Instead, it's fluid and ever-changing. Therefore, establishing accurate future income targets is a complex, but necessary component to sound retirement income planning. A good financial advisor will typically spend hours, with the help of sophisticated computer programs to narrow all of this down to realistic lifetime income objectives. Once this is done, the planning job shifts to figuring out the best way to marshal all retirement assets so that they can produce this required income. But there are many so-called professionals out there who will tell you that it's easy to cut through all this clutter and complexity by instead using a simple retirement rule of thumb. The advice is… "You'll need 70 to 80 percent of the income you made in your final years of employment in order to live a comfortable retirement." Well, that's easy enough. Or is it?

There is a very definite and unbreakable connection between risk and reward. Choose a financial instrument that helps provide greater potential returns, and you inevitably increase the degree that your money will be subject to investment loss. If instead you chose safety and protection over growth, expect the compromise of lower rates of return. Many retirees become frustrated as they search for the "perfect" investment that breaks this rigid risk and reward connection. Any time you hear of people getting taken advantage of and becoming the targets of fraud and financial abuse, it is typically because they wanted to believe there is some magical way to get high returns with no risk. Unfortunately, such excellence does not exist in the world of investing. And the more a person searches for this false perfection and refuses to recognize the unyielding relationship between risk and reward, the harder it will be to achieve retirement security.

Do you have your retirement date set, or have you already retired? And how about your financial plan…. Do you have things squared away? Or are you still working on putting all the pieces together? Creating a financial plan for retirement can be a tough job. There are a lot of moving parts and a ton of uncertainty that you'll have to consider. We want to help you with some easy tips that you can follow to create a better retirement plan.

These 4 areas of retirement planning are all areas that we see a certain level of misunderstanding. When we consult with clients and prospective clients each and every week, and in our daily discussions with retirees and pre-retirees, these are the areas that we see people simply get it wrong. So, today on the show we have identified 4 steps for you to take to make sure you create a better, more confident, financial plan!

You still need a paycheck during retirement to live comfortably. Some people will have Social Security and/or a pension. But most people won't have enough of a paycheck to keep the same standard of living. And that group of people will be forced to take the supplemental income they need from their retirement savings nest egg. To understand your budget and income needs make sure your money is aligned with your objectives, and what your monthly income "shortfall" may be.

Once you understand your shortfall and how much income your retirement savings nest egg needs to generate. Then create an effective income withdrawal and investment strategy. This is the monthly paycheck that you need still after your Social Security check and/or pension check comes in. If you still don't have enough monthly income after those income sources arrive because your budget calls for more, than you have a shortfall.

How would you like to switch your retirement savings to an account that grows tax-free? You can make tax-free withdrawals from the account. And you can leave a tax-free inheritance to your heirs. Right now, there are no restrictions on converting to this tax-free oasis. So, if you're considering a Roth IRA conversion you are going to want to think taxes.

Like most people, your taxable income is fixed and tied directly to your paychecks. However, the day you retire those paychecks end. But, the degree of control you may have over your tax may improve. Now you can manage the amount of income you will have to report to Uncle Sam. You'll have control other things that determine your taxable income. It's pretty much up to you as to how much money you withdraw each year from your retirement accounts.

You decide if you want to start your Social Security benefits as early as age 62, or delay those benefits, and any associated taxes they might trigger. It's entirely up to you as to when you might sell any stocks in your brokerage account, taxed at lower capital gains tax rate, if you want more income. Best of all, if you have some money in a Roth IRA, by now you may have fulfilled the requirements allowing you to take withdrawals … entirely free from income taxes. Any income that is tax-free will surely bring a tear to Uncle Sam's eye.

Don't have a Roth IRA? It may not be too late. In fact, those first five or so years after you stop working may be a great opportunity to convert some of the money in your taxable retirement accounts to a tax-free Roth. One very important thing to consider is that you'll have to pay tax on the money you convert. There's no free lunch here. Every tax dollar you are forced to pay now because of any conversion will certainly be painful, but just remember that paying this tax today could save you or your heirs many more tax dollars in the future.

However, the day you retire and those paychecks end, the degree of control you may have over your taxes might improve dramatically. It's a great time for some advance planning because now you can better manage the amount of income you will have to report to Uncle Sam each time April 15th rolls around. You have control other many things that determine your taxable income. It's pretty much up to you as to how much money you withdraw each year from your retirement accounts. You decide if you want to start your Social Security benefits as early as age 62, or delay those benefits, and any associated taxes they might trigger. It's entirely up to you as to when you might sell any stocks in your brokerage account, taxed at lower capital gains tax rate, if you want more income. Best of all, if you have some money in a Roth IRA, by now you may have fulfilled the requirements allowing you to take withdrawals … entirely free from income taxes. Any income that is tax-free will surely bring a tear to Uncle Sam's eye.

Don't have a Roth IRA? It may not be too late. In fact, those first five or so years after you stop working may be a great opportunity to convert some of the money in your taxable retirement accounts to a tax-free Roth.

One of the most common questions prospective clients ask us in a first meeting is, “Do I have enough to money to retire?” The question can be re-phrased in several different contexts. It’s the very same question as “Could I run out of money before I die?” After a working lifetime of saving, it is only natural for a pre-retiree or someone who has just recently retired to wonder if they will make it through. I’ve never met anyone who told me that they wanted to become a burden to their children later in life, or that they wanted to run out of money and live in poverty in the final days that they have left. Today, we want to discuss some tips that could help you avoid running out of money before you die. If you want to make it all the way to retirement, and then through retirement, you need to make sure you develop a plan for the longevity risks you will inevitably face. These tips just may help you do that.

A common question people ask is, "Do I have enough to money to retire?" The subtext is, "Could I run out of money before I die?" It's only natural for a pre-retiree or someone who has just recently retired to wonder if they will make it through. I've never met anyone who told me that they wanted to become a burden to their children later in life. Or that they wanted to run out of money and live in poverty in the final days that they have left. If you want to make it all the way through retirement, make sure you develop a plan longevity risks. Today, we want to discuss some tips that could help you make sure you wont out live your money.

One of people's biggest fears is that they will run out of money before they die. It's really a normal fear, and for good reason. There are several risks that make the possibility that you will go through your entire life savings too quickly a reality. We have 4 tips to help people not out live their money.

This tip involves spending money you have saved a lifetime for. Many retirees today might use Social Security and pensions supplemented with regular withdrawals from their savings. A strategy that many financial advisors tend to follow is called the "4 Percent withdrawal" rule. It was created over 20 years ago and says do not take out more than 4 percent of your saving out. However, the 4 Percent assumes that 50-75% of your savings are invested in stocks. Inflation could be higher than the 3 percent historical norm. Market performance could be poor. You could also live longer than you thought you would, or you planned for.

When it comes to maximizing Social Security retirement benefits, Americans do a horrible job. It's been reported that only about 4% of retirees make the optimal Social Security claiming decision. That means most people planning to retire will end up losing roughly $2.1 trillion dollars. When people decide to stop working they will have to know how long their savings will last them during retirement. The best way to address this by maximizing Social Security benefits. Famed economist Laurence Kotlikoff proved that millions of ordinary Americans can increase their total Social Security income – a typical example shows a single retiree collecting $131,951 more in lifetime income by optimizing benefits. Married couples might expect even more. So why don't more people take advantage of the opportunities they have coming?

It's shameful, considering millions of Americans' rely on it for future retirement security. Retirement can be such a great time in a person's life. But when most people think about it, it's hard not to be somewhat apprehensive when you face the reality of how you will get by for all those years without a paycheck. Maybe you're one of those people who have stashed away millions of dollars in your IRA or 401(k). Or, maybe you are like many people who face retirement regretting that they had not saved more. Regardless of your circumstance, the good news is that with proper planning it is easy to live like a millionaire… or at least a Social Security "millionaire". Here is what I mean.

Now, Social Security is such a valuable retirement tool that by increasing these benefits you could find yourself a more secure. If you are married and both you and your spouse use the right strategies, according to the Wealth Enhancement Group, you can easily collect a million dollars in benefits over your lifetime. But, by making the mistakes that most people make, you could literally leave hundreds of thousands of dollars on the table.

Today, we are talking about taxes and how they can lead to some surprises after retirement. This can be especially scary for anyone nearing retirement. Being "tax-wise" is no longer a concern for only the wealthy. Most fear that increased tax rates are looming on the horizon. That's why it's important understand tax diversification. .

Lots of people believe their personal tax bracket will be lower after they retire. However, it can surprise you that your income, after taxes, is less than you expect. Even, perhaps less than what you need. From a risk management perspective, you'll need to diversify to deduce your exposure to the risk. Creating a tax-wise strategy starts with understanding tax diversification

When looking at different retirement income sources there are a variety of financial vehicles. While a variety could result in "tax-wise" income strategies, most people aren't tax-diversified. Which is why the "One-Trick-Pony Approach" has been coined.

Most people reach retirement with 95% or more total savings in a 401(k) or IRA. That is where the "one-trick pony approach" to retirement savings comes into play. This is the case because we are "rewarded" with the postponed taxes. Don't forget that these taxes are only postponed. When you retire, 100 percent of this money will be subject to taxation. Traditional retirement planning has dictated that it is OK to postpone taxes. This is because you will probably be in a lower tax bracket after you retire. Tax diversification starts by considering how investment accounts are taxed. Then create many income streams with a tax-efficient withdrawal strategy.

To understand this, it's important to look that most contracts can be in one of three categories. It might be easier to think of these categories as buckets that you might use to hold your retirement assets.

If you are recently retired, it's time to shift your thinking when it comes to how and why you invest your dollars. You may be looking for the essential elements to a successful retirement plan. You've moved from "paycheck" mode into "distribution" mode. But, you might not realize it right away. However, when you've gone from adding to your portfolio to taking from it regularly, it's normal to have some hesitancy when it comes to transitioning your investments with this new phase of your life.

Now it's time to shift that mentality into keeping as much of your money while you spend it. Three essential elements to a successful retirement plan come to mind. Everyone in retirement needs at least these three things in their plan. Safety, Liquidity, and Growth Potential. That is, focus on the safety of their dollars, growth potential of their investments, and having liquid access to their money.

You will be hard pressed to find anyone who would say that they don't want their money safe. That they don't want any growth out of their assets. They don't want liquid access to their money. Everyone wants those three things, and they are even more important to have during retirement. So, let's start with the first pillar which is Safety. Safety and having "safe" money investments is a pivotal part of a complete financial portfolio in retirement. You can read textbooks and do your own research. It can be understood that retirees should be take less risk and protect themselves when investing.

Fundamentally, it takes longer to re-coup losses in retirement. This is because you won't be making regular contributions to your accounts like while you were working. . Having a portion of your investment portfolio invested or positioned in a safe or principal protected way should give you a lot of confidence about your financial future and allow you to worry less about your life in retirement. But don't overdo it, because safe money simply doesn't grow as much as money you are willing to take risk with

In recent years, there has been a huge push in the field of "behavioral finance." That is, what types of behaviors do people that can affect one's portfolio. That's what we are going to talk about on the today's show. We're going to discuss if it's possible that your financial behaviors could affect your retirement.

To dive in deeper we've outlined 4 biases people tend to run into! More specifically, the bad behaviors that could impact your financial life. Believe it or not, science has shown there are certain human emotions and behaviors, we all exhibit, that hurt our chances of financial success.

Odds are that you have probably never heard of its application until right now. These problems and emotions that investors face are very real, and they can be very impactful to your financial future if you ignore them. Most people do not process information solely on objectives and statistical numbers, so the financial planning process can be subjective. And therein lies the entire problem.

Money is emotional, the entire idea of it. I mean think about it. You've worked a lifetime to accumulate what you have. You spent long, hard hours to save it. You made sacrifices. Went through some tough times. When it comes to positioning your money into investments and making the final decisions on that, it's hard to set your emotional tie to your money aside and make a rational decision. Let's go over a few examples of behavioral biases and behavioral finance issues that you may be able to avoid simply by having a slight understanding and awareness that they are indeed there!

We want to avoid making some of these simple behavioral mistakes. We would be happy to help you develop a game plan to avoid these emotional and behavioral pitfalls.