Most of us tend to think of retirement planning as simply having enough money to quit working. But, retirement income planning takes on many new dimensions that never had to be considered by earlier generations. Retirement income planning should begin long before you retire – and it doesn’t stop at retirement.
Retirement income planning is a key component of wealth preservation simply because there’s more involved than simply achieving a decent return. Tax law changes, inflation, as well as unexpected expenses can wipe out years’ of savings. Many people fail to consider how retirement income coming from tax deferred accounts can impact their Medicare premiums – a good reason to plan for minimizing the amount of your taxable retirement plan distributions well in advance of those distributions becoming mandatory later. The most common concerns, of course, are:
- How much can I safely spend?
- What tax issues should I know about?
- What tax planning should I do?
- How much risk should I take?
- What investments should I choose?
- How does the distribution phase of my life differ from the accumulation phase?
How does tax planning change during the 4 stages of retirement?
Enjoy this video – and you can download this handout: IFG_How-Tax-Planning-Changes-HO2026
Knowing how to turn savings into retirement income that lasts and keeps pace with inflation requires a skill set not all who call themselves advisors possess. It’s not simply about where to invest, it’s also about how to ‘locate’ your money. In December 2022, congress passed a second version of The SECURE Act, dubbed SECURE Act 2.0, and it made some changes both to retirement savings and retirement income taxation. While there are over 100 provisions – yes, it can be rather confusing – there are FOUR key areas that most people need to be aware of.
SECURE Act 2.0 changed the rules, too. It doesn’t matter if you’re in Simi Valley, Moorpark, or Thousand Oaks, CA. Grab some coffee: here’s a 30-minute video that will walk you through the 4 key areas of SECURE Act 2.0 you might find helpful. You can download a fact sheet and see some short videos about the Act here.
Do you remember 1966? There was no recession or depression. No dot-com bust. No credit melt-down; yet, it turned out for many to be a terrible year to retire. Why? You might like this short video to learn why “Guardrails” are important in your retirement income planning – particularly for those years when you’re drawing down assets. You can view my video here
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.
It’s about more than choosing the right investments, strategy is important, too. No one can control the markets or politicians; but, external forces can be managed.
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 – and choosing the wrong one can result in life-long penalties and can impact your loved ones, as well. You can learn more on IFG’s Social Security page.
Your 401(k)
What should you do with your 401(k)? Should you stay or go? It’s not the simple decision many believe. Depending on your situation, you can have up to six options available to you – and all come with their own advantages and disadvantages. I created a series of videos that goes through all six options – I think you’ll find it well worth your while to do your homework before you make your decision. You can find them here. Enjoy!
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:
- Understanding Diversification
- Understanding Investment Returns
- Understanding the Mutual Fund Landscape
IFG has been helping people plan retirement for more than 22 years. For more information on retirement income needs and income sources, I’m here to help. You can get started here!
