Retirement Planning Blog

“The Breakfast Club” was a classic coming-of-age film. The stars of the movie? Gen X misfits dreaming of their futures during a fateful day-long detention in their high school library.

What they couldn’t have foreseen is that many Gen Xers would grow up to be responsible not only for their own well-being, but for the care and livelihood of their parents and their grown children as well.

So, if a sequel about Gen Xers was made today, it might be called “The Breakfast Sandwich Club.” And why? Many members of Gen X struggle to plan for their own futures while facing the financial impact of caring for the generations before and after them.

Survey Paints a Startling Picture

Balancing the competing priorities of financial support for family members means that Gen Xers are having a hard time with their own financial wellbeing. Researchers found that especially applied to building up both their emergency funds and retirement savings, according to a new survey released by PNC Financial Services.

“The survey revealed that current members of the sandwich generation, as well as those we call ‘half sandwich’ – folks caring for either children or elderly parents, but not both – are under financial stress. They’re struggling to save for their own needs,” according to Rich Ramassini, a director at PNC Investments.

“Adding the demands associated with financially supporting children and/or elderly family members now or in the future, paints a very grim picture for this demographic unless they take immediate action.”

PNC says it commissioned the survey to understand how respondents, who were between the ages of 36 to 60, handle financial decisions and any related stress involving investing and retirement.

Those interviewed were either the main financial decision-makers or they shared financial decision-making duties in their household, PNC explained.

Thanks to progress in healthcare and technology, you may expect to have a long retirement. But living to 100? While a lofty milestone, it’s not as out of reach as it may seem.

In 2014, U.S. government statisticians found that the number of people reaching age 100 had increased 40% from four years prior. And by 2050, the “100 and up” crowd is expected to grow to 3.68 million people worldwide.

Given the reality of lengthening lifespans, it’s no wonder why outliving retirement money remains a top concern. In a 2017 Allianz Life survey, almost two-thirds of surveyed Americans (63%) said they worried about running out of money in retirement more than death!

Financial planners and advisors call this chance of outliving your money a “longevity risk.” Building a well-defined retirement strategy will help you guard against this hazard, not to mention enjoy more financial peace of mind in your golden years.

Building a Financially Confident Retirement Lifestyle

A rock-solid plan will lay out how you maintain your lifestyle with the retirement income and assets at your disposal.

Whether someone lives to 100, goes beyond, or simply faces the prospect of a long-time retirement, the importance of managing your income and expenses also can’t be overstated. And it’s equally important to recognize that income alone doesn’t solve all problems in retirement if you don’t have a plan.

To help you plan for these golden years on the expense side of the ledger, we have assembled some general guidelines. For illustration, here’s an idea of typical expenses you might expect as you go through the three stages of retirement:

• Go-Go, 60-75: Just starting out, fit as a fiddle, traveling and living the dream
• Slo-Go, 75-90: Grandkids are growing up, may be time to consider selling the house or downsizing
• No-Go, 90+: Hung up your traveling shoes, every day is a blessing
  
  

Life in the work lane means keeping your nose to the career grindstone. You work hard over many years, balancing work and family while accruing a comfortable nest egg for your retirement.  

Along the way, you probably benefited from the discipline and focus that comes from working with a financial advisor. Their guidance was helpful in growing your portfolio and other assets to where they are now.

This life stage is called the “accumulation phase,” and its long-term priority is with the growth of your financial assets. Yet it’s just as important to plan for the backend, or when you start drawing on your nest egg for retirement income.

After all, life changes quite a bit when you retire. Your sources of income will change once you hit the golden years, whether you were a full-time executive, you ran your own business, you worked in a government capacity, or you steadily climbed the ranks as a salaried employee. And not only that.

There is also the matter of “distributions” from your portfolio. Withdrawals have tax implications, especially if money is taken from accounts or vehicles that had special tax treatment as you accumulated funds within them.

And don’t forget the question of longevity, which poses the potentially costly risk of outliving your retirement money. With the numbers of people living to their 90s, and even to 100-and-beyond, increasing by the year, there runs the possibility of a nest egg being mismanaged for long-term income needs.

Most people consider investment returns as a benchmark for judging the performance of their portfolio. This may be especially true for retirees and pre-retirees who likely have been invested in the market for some time. That experience might have been through brokerage mutual fund investments, brokerage accounts, or even retirement savings plans such as 401(k)s or IRAs.

But the reality is that many financial concepts rely on average returns to forecast future portfolio activity. Yet compounding growth and compounding losses are the real-life factors that will potentially affect a portfolio’s value. 

This is strongly exemplified in sequence of returns risk, a potential hazard for American retirees. And that doesn't apply to only retired households.

Sequence risk can also linger for soon-to-be-retirees, especially during the “retirement red zone,” that critical decade of five years before and five years after one retires.

“Nothing is certain but death and taxes,” as the old saying goes. And while the question of spousal survivorship is an uncomfortable topic, it’s far too important to put off.

No one lives forever. What will happen when you or your partner pass away before the other? In that event, what is your plan?

To help you prepare ahead of time, here are some general guidelines for developing and managing a long-term retirement and financial survivorship strategy. They stress the importance of “income continuity,” or having uninterrupted income streams in place after the first death in a couple.

Couples today also face the prospect of a long retirement, thanks to advances in medicine and technology. These innovations make living to 100 not as difficult as it was in the past. No sweat. These guidelines can help with planning for the challenges of a potentially decades-long retirement, especially when there is a significant age gap between partners.

But before starting, consider establishing a relationship with a financial professional if you don’t already have one. You may be quite capable of developing a plan yourself.

But at a minimum, a financial professional can review your plan, look for shortcomings, provide some alternative ideas, and keep you abreast of changing laws and regulations with respect to your financial picture.

That includes planning for federal and state income taxes. You may find they can enhance your existing income plan with their knowledge of the various types of retirement income programs: Social Security, pensions, 401(k)s, IRAs, Roth accounts, annuities, reverse mortgages, and so on.

If you are an employee of the U.S. government, then you and millions of your colleagues have access to the largest life insurance program in the world: the Federal Employees’ Group Life Insurance Program (FEGLI). It's one of a number of employee benefits available to the federal civil service.

Created in 1954, FEGLI provides group term life insurance that may serve several purposes.

Federal employees depend on FEGLI for many reasons in the event of untimely death: income replacement, death benefit protection, coverage for debts or expenses that may overwhelm survivors, financial safeguards for young families, and other benefits.  

FEGLI often features a lower requirement for participation compared to other life insurance policies. For private-sector group life insurance – or just personal life insurance coverage in general – people are often required to undergo a medical examination or to meet other eligibility criteria.

Many Americans cheered the passage of the Tax Cuts and Jobs Act, a $1.5 trillion tax code overhaul that was signed into law in December of 2017. Proponents of the legislation said the benefits would be lower tax rates for both individuals and corporations. Not only that, it would bring a long-desired simplification of the complex U.S. tax code.

But as people begin to file their 2018 taxes, then await their customary tax refunds, some taxpayers are finding surprises. Their refunds are lower than they expected, some deductions have disappeared, and in some cases, they have actually owed money to the IRS.

As 2019 begins, two new surveys suggest that both advisors and economists aren’t so optimistic about where the economy is headed.

This kind of insight from industry experts is useful, but especially to those who are approaching retirement. Knowing what pundits and advisors believe could lie ahead, and exploring what action can be taken in case of any untimely disruptions to their portfolios, is critical to those within five to 10 years of retirement.

So, what do advisors and economists see when they look ahead? They see the shakiness of 2018 leading to a potentially rocky 2019.

You have had your dream retirement in the back of your mind your entire life.

Whether that movie in your head shows you traveling to exotic lands, spending quality time with your grandchildren, or turning a lifelong hobby into a business, retirement isn’t the end of your story. It’s the beginning of an exciting new sequel.

But how do you make the retirement of your imagination a reality? For many, bringing their ideal retirement to life includes consulting with a financial professional who specializes in retirement planning services.

If you have a nest egg, you have experience in personal finance. Earning an income and saving for a “rainy day.” Building wealth in equity markets, and putting away money into a 401(k), IRA, or other retirement account.

But those are all actions on the front side of retirement—called the accumulation phase. The backend? It's known as the distribution phase, or how you draw retirement income from those assets accumulated over many years.

How you prepare for reliable income streams in retirement will determine if you live out the retirement of your dreams -- or possibly deal with some scaled-down version.

Finding the right retirement planning services can help strengthen your chances of a confident lifestyle.

A new year has dawned, and you can feel the anticipation in the air. People everywhere have scribbled down their New Year’s resolutions, as 2019 has swept in the allure of new beginnings.

A world of opportunity awaits!

Perhaps with a nod to another passing year, many of us will put eating healthier at the top of our list of resolutions. Hitting the gym more often (or even at all), being more productive with our time, and perfecting our work-life balance are perennial New Year’s Resolution favorites.

And for those in their 50s who have visions of their ideal retirement, the New Year is an ideal opportunity to take stock of what they want to achieve. It’s a time to evaluate where they are in terms of reaching that goal, and to reflect on whether they need to create or refine a retirement plan that will help them get there.

Especially for those who are planning on retiring within the next five years, here are three New Year’s Retirement Readiness Resolutions.