So here’s the scenario, let’s say you are about 5-10 years away from retiring. As a future retiree, you may now be weighing your options to determine how you will cover your cost of living and sustain it to enjoy your retirement. You are probably examining your current debt– reviewing where you are with your mortgage, credit card debt, or outstanding loans. You are also probably examining your assets– how much is in your 401k and IRA accounts or other assets such as bonds and stocks. You might be considering, how can I leverage my 401k or IRA to live off of the rest of my life?
For a person in your shoes, there 5 major areas that you must consider: Investments, Cash Flow Management, Tax Planning, Estate Planning, Insurance Analysis and Planning.
Investments: Build an investment plan that “fills the buckets,” identifying how much you need allocated to an income strategy to YIELD the income you need in retirement so you are not basing the success of your retirement plan on the outcome of equity returns and the stock market’s success.
Cash Flow Management: The basic question to all investment planning is, “How much is coming IN vs. how much is going OUT?” Matching your income needs with your current income cash flow, including Social Security, pensions, etc., is crucial to understanding how your investments will meet your income goals. This is more than a budget, it’s an understanding of how you are going to match your income needs with your cash flow sources.
Tax Planning: Utilize your financial advisor to ensure that all investment strategies are being used in the most tax-efficient manner. Municipal bonds vs. taxable bonds, individual MLPs vs. ETFs with 1099s, dividend stocks or interest-bearing bonds – these are just some of the considerations that should be discussed to maximize a plan’s effectiveness.
Estate Planning: Use a financial advisor who has a strong network of estate planning attorneys to make sure that account structure and plans are married properly with the estate plan. Decisions such as what types of accounts to hold assets in (trusts, JT tenancy, individual, etc.), as well as proper beneficiary designations are crucial to carrying an estate plan out from a will through passing assets on to heirs. If a plan has not been put in place, we will work with our clients and help them communicate their larger goals and wishes to a professional when the drafting a document process begins.
Insurance Analysis and Planning: Use your financial advisor to analyze your insurance options. You may need to review new policies, existing policies, or long-term care planning.
To see more sample scenarios that might fit your unique circumstances, visit our Sample Client page or call our office to schedule a consultation.