Retirement Planning

Many working-age Americans have at least some idea of when they want to stop working and sail off into the sunset. But sometimes there can be a major gap between what we plan and what actually happens.

For many workers, one such gap is between the age at which they want to retire and the age at which you discover that you have to retire instead. A surprisingly large percentage of American workers are forced into early retirement for a variety of reasons. Those reasons include job termination, layoffs, personal health issues, or a need to care for elderly parents or other relatives.

Of course, early retirement can come with its own financial headaches. You might need to begin taking Social Security early for a reduced benefit. Or you might have to deal with not having enough savings to last for the rest of your life. Whatever the challenges, it’s a period of major adjustment.

Early retirement means that you will have fewer years to save for retirement. You will also have a longer period of time over which you must stretch your money.

What if you plan to work until age 65 or 70? It’s wise to create a financial projection of what your retirement will look like if you had to stop working at age 55 or 60.

And don’t be surprised if you run into some sort of income shortfall. Not everyone is fully prepared to retire early when forced into retirement. So, to be ready for that possible outcome, you might have to make adjustments to your plan accordingly. Read More

People are living longer than before, leading many to ask: “How long could my retirement really last?” In generations past, retirement represented a relatively short period of time in most peoples’ lives. They would work until they were 60 or 65 and then live perhaps a few more years before passing away.

But this has become a thing of the past. Today, some retirees could live for as long as another 30 years after they finish with their careers. Many of them are now travelling around the world, starting new businesses, or doing charity work.

The answer to this question will depend upon many factors, such as your projected longevity, financial resources, and current health. If you come from a family of long-lived forebearers, then you may have a good chance of living that long yourself. If you smoke or drink heavily, then your lifespan may not last as long as it would if you quit doing those things.

Thanks to advances in medicine, technology, and wellness, people’s lifespans are longer than before. The National Vital Statistics Report from the Department of Health and Human Services revealed that the average American’s lifespan has increased by 30 years over the past century. Read More

Uncle Sam can be one of your key partners in your retirement saving. If you have money in a traditional IRA or an employer-sponsored retirement plan, then that money automatically receives tax-deferred status in the eyes of the IRS. Other accounts like SIMPLE IRAs and SEP-IRAs also benefit from this tax-favorable treatment.

Generally, your contributions to those accounts are tax-deductible. The money inside the account grows tax-deferred, or without taxes on the earnings over time, as long as withdrawals aren’t taken.

But you can’t enjoy this tax-deferred growth forever. Required minimum distributions are one way that Uncle Sam ultimately collects his tax dues.

Once you reach your early 70s, the IRS sets required minimum distributions (or RMDs) for you, and when you start . You will be required to start pulling a certain amount of money out of your traditional IRAs and qualified plan balances every year.

The same goes for other kinds of IRAs with pre-tax money status. And this money will be taxed at your top marginal tax bracket, regardless of how long it’s been in the account.

Before wide-ranging retirement reform called the SECURE Act was passed, the age for starting required minimum distributions was 70.5. However, the SECURE Act, passed in 2019, moved the starting age for RMDs to 72 for those born on July 1, 1949, through and including December 31, 1950.

Then the SECURE Act 2.0, passed in 2022, backed up the starting age for RMDs to 73 for those born on January 1, 1951, through and including December 31, 1959. This RMD starting point is slated to rise to 75 in 2033, for that matter, unless the law is changed yet again.

There is no capital gains treatment available for traditional IRAs and qualified plans, save for one exception. The sale of company stock held inside a 401(k) plan can be spun off and sold separately under the Net Unrealized Appreciation (NUA) rule. Read More

Once a corporate giant, General Electric Corporation has found itself in a downward spiral in recent years. The former staple of American business has been working to clear some substantial debt off its books.

One of the company’s latest big moves? To reduce debt by freezing its employee pension assets. This means that benefits will not continue to accrue for its employees, even though they continue to work there.

But while this is obviously better than pension termination, where the pension plan is simply dissolved, it marks the latest casualty in the pension landscape in corporate America. Read More

When it comes to taxes, you can be sure that Uncle Sam will want his share. Retirement tax planning can help you make the most of your money. Tax-wise strategies let you maximize your income and keep more of what you have accumulated over a lifetime of hard work.  

But while Uncle Sam’s tax collections are a certainty, what is less than clear for millions of retirees is their own tax bills. Many don’t know whether they are paying too much in taxes or not – and how, in turn, that affects their retirement income streams.

Fortunately, there are several ways that you can reduce your tax bill after you stop working through the proper use of annuities and IRAs.

The order in which you withdraw your assets can also substantially impact the amount of tax that you will have to pay. Studies have shown that a properly-structured withdrawal schedule can extend the life of an investment portfolio by as many as 6 years in some cases. Read More

While retirement has many hard-to-predict moving parts, like what your spending might look like, perhaps one of the most difficult questions to answer is this: “How long will you live?”

Thanks to advances in healthcare and technology, people are living longer. According to the Social Security Administration, the statistical average for a 65-year-old man is to age 84. For a 65-year-old woman, it’s 87.

Economists call the possibility of spending decades in retirement a “longevity risk.” Still, keep in mind those numbers are just averages. What someone’s longevity looks like on a personal level will depend on their family history, health status, and lifestyle choices over the years, among other things.

For many people, the uncertainty adds up to financial concern. In one survey, almost two-thirds of surveyed Americans said they worried about running out of money in retirement more than death!

However, if you are to have a Retirement Plan that guides you across the Arc of Retirement, you will need some guestimate of how long you might live. That way you don’t underspend or overspend your financial resources.

Here are five steps to help keep longevity risk at bay and tame the uncertainty. Read More

Having a financial plan is essential for a comfortable lifestyle, whether you are approaching retirement or are already retired. But what if you haven’t prepared yet for retirement?

Should you find yourself procrastinating and not developing a long-term Retirement Plan (“PLAN.xls”), take heed. This can get you into serious trouble over the long run, with your post-work lifestyle possibly taking a hit in one of two ways: by either overspending or underspending.

There is a weird psychology that can cause a retiree to drag their feet on developing a personal financial strategy. They might worry that, if they know too much about how their finances will play out over time, it will either scare them or at least disappoint them as financial reality sets in.

Think of it as a distorted version of the old saying, “What you don’t know can’t hurt you.” So, retirees spend away, figuring that they will worry about it later.

However, in the case of retirement, what you don’t know CAN hurt you. Especially when time isn’t on your side, and big financial mistakes are much harder to recover from since you aren’t working (or as least as much as you were earlier in your career) and the lifespan clock is ticking.

Whether dealing with overspending or underspending, the irony is that you will carry a heavy burden of worry in either case. But what you are really searching for in retirement is, above all, peace of mind. Read More

If you are among the rare few with a retirement pension, congratulations! You have a benefit that is becoming increasingly rare.

With the 401(k) plan becoming the workplace retirement plan of choice, people hold more responsibility for their financial futures than ever.

Knowing you have a pension gives you the comfort of knowing that, once you retire, you are scheduled to receive monthly income payouts for life. Your income payment will be based on your salary and your length of employment.

Just like with annuity payout options, the lifetime payout option you select with your pension plan will have a direct bearing on how much income you receive. Read More

Imagine you’re driving to work, daydreaming about your future retirement plans. Suddenly, you walk into the office, and your boss hands you a pink slip. Forced to retire, what do you do now? This unexpected scenario can be daunting, but it’s crucial to be prepared as you approach retirement. Life is unpredictable, and the best way to handle such surprises is to have a solid back-up plan in place.

Read More

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. Read More