Being retired is about financial independence, not aging or even giving up working. There were probably times that you wanted to do something but couldn’t because you didn’t have time. You were too busy working to earn income.
In this phase, your hard work and diligent saving have paid off, you now have both time and the money to focus on what matters most to you. This doesn’t mean you can relax without a care in the world. There are plenty of uncertainties ahead. Here are important issues to address:
Make prudent withdrawals
The investment goal while you are living the dream is to grow your income so you can keep pace with inflation. Rodgers & Associates helps you keep up by using to the 4% rule for prudent withdrawals as a guide. An industry study1 found that an investment portfolio with the proper asset allocation may be able to sustain annual withdrawals of 4% and keep pace with inflation. We develop an investment policy for each client and then monitor their portfolio and withdrawals to verify the allocation is properly maintained and withdrawals are not excessive. Our regular portfolio review for each client provides confidence that their investment strategy is working and stays on track to reach their goals.
Implement a tax-efficient strategy for your portfolio
Did you know that Social Security can be taxable based on your income? Or that Medicare premiums are determined by your Modified Adjusted Gross Income? Our tax-efficient approach to retirement planning, the New Three-Legged Stool™ strategy, is designed to minimize taxes and Medicare premiums. Part of each quarterly review is devoted to minimizing taxes by analyzing the best place to draw income for each client’s situation. A 2019 study2 evaluated the impact of tax-efficient distributions on the sustainability of withdrawals and found the most tax-efficient sequence could extend the portfolio seven and a half years longer than the least tax-efficient sequence!
Decide on Medicare
Many seniors rely on Medicare to provide their health insurance coverage. We educate our clients about healthcare coverage options because Medicare does not cover everything. There may be reasons a client should choose a Medicare Advantage plan over traditional Medicare. We help our clients work through the pros and cons so that they can make a choice for their unique situation. Choosing the right one can be complicated and each November, the selection must be reevaluated during open enrollment.
Maximize your Social Security benefits
When should you draw Social Security benefits? Should your spouse draw first? These are questions we help clients answer to get the most from this important government program. The Social Security website contains more than 2,700 separate rules governing when benefits can be claimed and how. It is important our clients get this right the first time. We feel a financial strategy should consider other income sources, taxes and potential health issues to determine the optimum time for each client to sign up for benefits.
Determine your long-term care strategy
One of the biggest financial challenges facing seniors is the fact that many people will need some form of living assistance in their final years, often referred to as long-term care (LTC). We work through the important issues concerning the potential need for LTC and help our clients evaluate the best way to guard against this risk. Our advisers stay up-to-date on the cost of LTC. We run a financial analysis to determine whether a client may be able to cover these costs out of their income and assets. Then a comparison is done among other options such as private insurance, and retirement communities with assisted living. If our clients are considering a retirement community, we can help them determine the best contract option for their situation. There is no simple solution to determining a long-term care strategy. However, more options are typically available to those who start planning early while they are still healthy.
Live your best retired life.
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10 years before retirement
Develop a comprehensive plan to help ensure you will reach financial independence tax efficiently.
Learn about phase 1 →
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2–9 years before retirement
Reach a solid financial position through a disciplined approach to managing changes in the years leading up to retirement.
Learn about phase 2 →
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1 year before and into retirement
Transition to financial independence and fine-tune your plan to prepare for post-retirement taxes and healthcare.
Learn about phase 3 →
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In retirement
Stay focused on decisions related to taxes, Social Security, and investments to help ensure your savings last.
You are here
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Beyond retirement
Take an active role in teaching the next generation how to handle wealth and the responsibility that comes with it.
Learn about phase 5 →