Retirement Planning

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Most of us tend to think of retirement planning as simply having enough money to quit working. But, retirement planning today has taken on many new dimensions that never had to be considered by earlier generations.

One key issue is longevity risk. People are living longer. A person who turns 65 today could be expected to live as many as 20 years in retirement – and some as long as 30 years – as compared to a retiree in 1950 who lived, on average, an additional 15 years. Generating enough capital to produce an income for two people over thirty years of inflation and tax-law changes is no easy feat.  Longer life spans have created a number of new issues that need to be taken into consideration when planning for retirement.

Paying for Retirement

Retirees who have prepared for their retirement usually rely upon three main sources of income: Social Security, individual or employer-sponsored qualified retirement plans, and their own savings or investments. A sound retirement plan will emphasize qualified plans and personal savings as the primary sources with Social Security as a safety net for steady income. The key to financial success is, of course, having a plan – and doing it early!

The Lifetime Retirement Income Need is larger than most believe.

As noted above, it takes a lot of money to support two people for thirty years of inflation and tax law changes. Retirees need to be concerned with maintaining their lifestyle by building a rising stream of income.  While many think it’s all about choosing the right investments, they might be surprised to learn it’s more about how assets are arranged. We can’t control the markets or politicians; but, we exercise some control over a process that keeps an eye on cost, risk, and tax optimization.

Social Security

When should you claim your Social Security benefits? Choosing the correct claiming strategy can mean hundreds of thousands of dollars over a lifetime! Social Security was established in the 1930’s as a safety net for people who, after paying into the system from their earnings, could rely upon a steady stream of income for the rest of their lives. Unfortunately, few incorporate Social Security optimization planning as part of their total financial plan… a mistake that can cost hundreds of thousands of dollars over a lifetime.

Your 401(k)

As in all qualified plans, withdrawals made prior to age 59 ½ may be subject to a penalty of 10% on top of ordinary taxes that are due, despite that, many have been tempted to tap that money to start a business, buy a home, or make some other expenditure, which can have devastating consequences in later years.  You might enjoy this short video:

Understanding Investments and Diversification

Investment management requires a basic understanding of the principles of diversification and knowing how investment returns are computed.  In addition, it’s important to understand the costs of various investment options.  The most popular investment option in most retirement plans is the mutual fund.

Here’s some reading on all three you might find helpful:

IFG has been helping people plan retirement for more than 22 years. For more information on retirement income needs and income sources, please contact IFG today.

Interested in becoming an IFG client?  Why play phone tag?  Schedule your 15-minute introductory phone call!

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

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20-Minute “Right Fit” Introductory Call Now!

Jim's picture
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.

Schedule Your 20-Minute
“Right Fit” Introductory Call Now!