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Beyond Investments- Retirement Planning

Published by: Skee Orr, CFP® Date: September 04, 2020

Retirement planning describes a broad spectrum of considerations, trade-offs, and time-sensitive decisions. Social Security, Medicare, 401(k), IRA, long-term care…these are only a few of the buzzwords flooding our minds as we approach the stage of life we call retirement. Our Advanced Planning article series has articulated many pieces of the financial planning puzzle and how each is crucial to the overall plan. For many of our clients, these concepts all become priorities during a transition, and often that transition is retirement.

The concept of “retiring” from work is relatively new. I read an article recently that comically, but accurately, stated that a few generations ago, a “retirement plan” was working until you passed away. Although we are fortunate to have the opportunity to enjoy our life’s savings and benefit from the sacrifices we made during our working years, we find the idea of retiring is still evolving. Many clients retire and begin their leisure and travel journey after many years of working and saving. However, it is not uncommon to slow down the pace while never fully retiring. We hear the comment, “retire from what?” When you love what you do (regular job, part-time work, volunteering, etc.), getting away from it is often not the number one priority in fulfilling your life’s goals. Therefore, the concept of retirement planning can not possibly be a one-size-fits-all product or strategy. Each of us has unique values, goals, and desires, which requires a customized plan to put us in a position to achieve what is most important.

Our industry is full of confusing jargon and terminology. On the surface, it appears to be designed in a way that is difficult to understand. This unfortunate fact prevents many people from seeking retirement advice simply because the topic can be unapproachable. If we begin the conversation from a different starting point, we find that all these topics are simply the means to our end, and they aren’t as tricky to master if we prioritize and take them on one at a time. Many of our new clients are surprised when we don’t begin the conversation listing out assets and income sources and what you should do with them. Instead, we start with your “end” – what are you trying to accomplish? From there, we can back into the steps we need to take to get there, and that’s where those critical data points come into play.

When going through this planning process, we help clients understand each decision’s pros, cons, costs, and values. Each time we make a decision, our charge is to ensure it results in an outcome to bring you to your “why,” and helps you stay on track. Some examples include: do you need a supplement to Medicare? Should you begin converting your Traditional IRA to a Roth IRA? When should you and your spouse start taking Social Security benefits? There are rules of thumb for each answer, but we find examples almost every day where the rule of thumb is not optimal for a client’s plan. These choices can feel overwhelming when looked at in a vacuum. However, in the context of a comprehensive plan, you can make decisions with confidence.

Financial independence is an achievable goal. Yes, there are many decisions to be made today and in the future to make it happen. Some will be easy, while some will be difficult. The best time to start in the right direction is here and now. Begin by identifying your “why”. With a clear understanding of your “why”, the details become easier to work through together.