Get Ready

The right allocation for equites (stocks) and fixed income (bonds) should be based on your time left until retirement and the rate of return needed to build up your nest egg. We design a portfolio allocation for our clients aimed to generate an income they shouldn’t outlive. The portfolio design is just the beginning. All our clients’ invest­ments are monitored regularly against key indicators to assure they are performing up to expec­ta­tions. The allocation is then rebal­anced to take advantage of market fluctuations.

Diversify your savings across accounts and investment vehicles that are taxed differ­ently: taxable (e.g., individual and joint accounts), tax-deferred (e.g., 401Ks, IRAs, and annuities), and tax-free (e.g., ROTH IRAs and savings). We call this strategy of savings the New Three-Legged Stool™ of tax-efficient retirement planning. Building a tax-efficient New Three-Legged Stool™ takes prepa­ration and this is the best time to balance the legs of your stool. The ability to take income from each leg of the stool can allow you to control taxable income, which could minimize taxes during retirement

If you are 50 or older, you can put an additional $6,500 “catch-up contri­bution” in an employer sponsored plan like a 401(k) or 403(b). You can also put an additional $1,000 in a tradi­tional IRA or Roth IRA. However, you must be 55 or older to put an additional $1,000 in a Health Savings Account. Does it make sense to make catch-up contri­bu­tions? We help our clients choose wisely by analyzing their plans from a risk, tax, and personal goal perspective.

If you’re retiring before 65, is health coverage available through your employer or their spouse’s employer? If you’re married, will your spouse still have healthcare coverage after retirement? It is important to uncover any potential problems with healthcare coverage during this phase, which could be the difference between retiring early or working later. Long-term care is expensive, and it is not covered by Medicare. We start by evalu­ating whether you will have enough assets to pay for long-term care out-of-pocket. If not, buying a long-term care insurance policy now may be a smart move. However, insurance premiums for a policy will be an expense to plan for and adjust if needed.

How will you spend your days? Travel, pursuing hobbies, part-time work? How will you fill your time doing things you enjoy and find meaningful? Visual­izing life after work is an important part of planning and deserves as much thought and attention as taxes and investing. In some ways it’s easier to figure out all the financial projec­tions associated with retiring. We under­stand how important it is for future retirees to be prepared for having time on their hands and how to pursue happiness when the work chapter of their lives comes to an end. We have found that moving towards new goals can ease your transition to this next chapter.