Posts Tagged ‘retirement planning’

How Can I Make The Most of My Retirement?

Wednesday, April 23rd, 2014

During my 30 years of financial planning experience, I have come to find that there are four phases of a person’s life. If you’re a Baby Boomer, each phase is approximately 22 years in length. Phase 1 is our formal education and/or training. During Phase 2, we try to figure out what we are going to do for a living, and then focus on becoming as proficient at it as we can be. In Phase 3, we strive to be on top of our game and begin to accumulate wealth. It’s Phase 4 that should prove to be, as long as we enjoy good health, the most gratifying phase of our lives. For in Phase 4, we should be able to step back and enjoy our journey at a more relaxed pace. It is during this phase that we are oftentimes best positioned to positively impact the people and causes that are important to us, while hopefully leaving this world a little better than we found it.

Financial and Emotional Threats to Retirement

Certainly, there are financial challenges that you may face that you should address in order to live the lifestyle necessary to accomplish your mission. These financial challenges exist for many of us due to longer life spans, the decrease of defined benefit retirement plans, and the uncertainty surrounding programs such as Social Security and Medicare. Because of our longer life expectancies and the disappearance of guaranteed pensions, many Baby Boomers are choosing to cut back the hours that they work rather than retire. For some it becomes a phase-out period of their career, while others choose to commence an entirely new career.

I have had the privilege to work with financially successful people whose fourth phase of life is not threatened by financial insecurity. However, they may have confronted emotional challenges that surface due to their loss of identity. It’s common for a person in a management position of a large company to discover that many of the people they considered friends prove to have been what I refer to as “positional acquaintances.”

Once that person retires and no longer holds a position on the company’s organization chart, the remaining people on the chart begin to interact with the new leader and no longer interact with the retiree.

So regardless of whether the threat to your enjoyment of Phase 4 is financial and/or emotional, below is a list of potential remedies that should be helpful tools as you attempt to position yourself for an enjoyable victory lap of your life’s journey.

7 Remedies To Help You Enjoy Your Retirement

  1. Develop hobbies or participate in community service activities that will provide you with an outlet to use your time and talent.
  2. Diversify your group of friends to include individuals who are not from work.
  3. Be a disciplined contributor to your retirement plan. During Phase 2, always contribute at a minimum the amount that your employer will match. During Phase 3, consider contributing the maximum amount permitted.
  4. Consider phasing out of your career and/or commencing on a new career that is aligned with your time, talents and passions. Continuing to earn an income can afford you the option of delaying access to your retirement funds and Social Security benefits.
  5. Become familiar with your Social Security options. Waiting to access your monthly benefits until you’re 70 years of age can generate a 75 percent increase of your monthly benefit at age 62. With today’s life expectancies, doing so could provide significantly more retirement benefits to you or your spouse during your lifetimes.
  6. Examine your current lifestyle and determine what is important to you. Where possible, trim unnecessary activities and related expenses and begin shaping your desired retirement lifestyle.
  7. Leverage tax law to subsidize the cost of your chosen lifestyle. The American Taxpayer Relief Tax Act of 2012 added a complexity of additional tax brackets and disappearing tax deductions that are tied to income levels. As a result, tax bracket management, where you accelerate or defer income into low tax bracket year and deductible expenses into high tax bracket year has become more important. Proactive tax bracket management, coupled with disciplined investment of realized tax savings, can significantly enhance the cash flow available to you during your victory lap.

By applying the strategies above, the increased amount of cash you could realize during retirement could be the difference between enjoying your retirement or not enjoying it. Consider taking some of these steps today in order to enhance your chances of living your dream in the future.

Retirement Planning Help

If you’re unsure of what your future retirement holds, contact Rea & Associates. Our team of Ohio personal tax professionals can help you evaluate where you’re at currently and can help you map out where you want to go on your retirement journey.

Author: Frank Festi, CPA, CFP (Medina office)

 

Want to gain more tips for retirement planning? Check these blog posts out:

Retirement Is Knocking … Are You Ready To Answer The Door?

Will You Be Ready for Retirement?

What Are The Rules For Taking A Distribution from My 401(k) Plan?

 

Share Button

Retirement Is Knocking … Are You Ready To Answer The Door?

Wednesday, April 2nd, 2014

Traveling to exotic places. Spending hours on the links. Enjoying time with the grandkids. Supporting philanthropic efforts. While these all might be things you hope to do during retirement, do you have any idea the likelihood that you’ll actually get to do them? Sadly, more and more individuals are finding that they’re not adequately prepared for retirement. According to the Employee Benefit Research Institute’s (EBRI’s) March 2013 Retirement Confidence Survey, 49 percent of individuals surveyed are “not very confident” or “not at all confident” that they’ll have enough income when they hit retirement. That’s an astounding, yet insightful number. How would you answer the question, “How confident are you that you’re prepared for retirement?” If you find yourself in either of the categories mentioned above, all hope is not lost.

For many of you, retirement probably seems light years away. But there may be some of you who are fast approaching retirement age. Wherever you’re at on the retirement spectrum there are practices you can put in place now to move you toward your retirement goals.

Five Practical Tips for Retirement Readiness       

  1. Look at your ability to save and cut corners where you can to save money. Even if your savings goal seems beyond reach or too distant in the future to be of concern now, re-evaluate where you can save and strive for it. Some individuals won’t begin to save if they see the goal as unattainable and set themselves up for failure before they even begin. Just as a tiny grain of sand can form into a pearl within an oyster over time, small steps in saving for retirement can lead you to your goals. Take responsibility to make it happen, and get financial advice if you need some help.
  2. Determine what you expect your retirement lifestyle to look like. If you dream or envision traveling to those exotic places I mentioned earlier, or perhaps you want to buy a motor home and travel the United States, it’s critical that you have the funds to do it. In theory it sounds like a great idea, but what many people realize upon retirement is that they don’t have enough funds to support these kinds of adventurous or carefree lifestyles. The EBRI survey cited above also showed that seven out of 10 individuals haven’t talked with a financial advisor about their financial situation nor have they put together a plan for retirement. If you want to have a retirement that’s close to what you dream of, put a realistic plan together for what you expect retirement to look like and go after it to make it happen.
  3. Evaluate your debt. Have you purchased a new car? Is your mortgage paid off? Are you (or are you planning on) paying for your kids’ college education? As you prepare for retirement, it’s important you evaluate your debt situation. Ideally, you don’t want to go into retirement with any debt. Work hard now to pay off debt you may have. It’ll pay off (literally and figuratively) later on down the road!
  4. Consider what monetary resources you have to pull from. There’s a whole slew of ways you can fund your retirement. Make certain you are taking advantage of any retirement plan your employer offers. Not only does this give you the ability to save for retirement, but many employers will also contribute money for you – do your best to take full advantage of the contribution your employer will make for you. Personal savings and other avenues, such as an Individual Retirement Account (IRA) or investment in property, could be considered. Social security benefits can also be factored in as part of your retirement benefits, but should not be viewed as the only or primary source of retirement income.
  5. Anticipate medical costs and needs. You may feel fit as a fiddle. But unfortunately for many of us, that feeling won’t last our entire lives. As we get older, our bodies age, and it’s important for us to prepare financially for any potential medical costs or needs we could encounter. Medical costs are one of the more commonly overlooked items when planning for retirement. Knowing your family’s medical history could be helpful when anticipating your future medical costs. 

Retirement Planning Help

While these five tips won’t completely solve all of your retirement woes, they’ll help you get in better shape for retirement. Don’t wait until it’s too late. To celebrate National Employee Benefits Day, which is today, start preparing for the retirement of your dreams today. If you need guidance or additional insight on how to best plan for your retirement, contact Rea & Associates. Our team of Ohio tax professionals can help you put together a plan to ensure you’re on a good path to retirement.

Author: Darlene Finzer, CPA, QKA, CSA (New Philadelphia office) 

 

Looking for more advice on retirement planning? Check out these posts:

What Are Ways You Can Ensure You’re Ready for Retirement?

Will You Be Ready for Retirement?

What Are The Rules For Taking A Distribution from My 401(k) Plan?

 

Share Button

What Are Ways You Can Ensure You’re Ready for Retirement?

Wednesday, March 5th, 2014

Yes, yes. You have a million things going on, and retirement planning may be the furthest thing from your mind. But it really shouldn’t be. In order to be well-prepared for retirement, you need to start now regardless of where you’re at in your career. Here are five financial requirements you should focus on as you prepare for retirement: (more…)

Share Button

How Do You Prepare to Sell Your Business?

Wednesday, February 20th, 2013

Do you plan to sell your business someday? Although you may not think of your business as a traditional retirement plan, it may be the largest asset you have to “cash in” upon retirement. There are many issues to consider when thinking about selling your business.

Timing of Business Sales

One of the first things a potential buyer is going to ask for is historical financial statements. If your most recent financial statements show healthy profits, you are more likely to be able to justify a larger selling price than trying to sell your business after several less profitable years.

Current developments in your industry may also impact the timing of when you want to sell your business. Do you anticipate new government regulations that could impact your business? Or is there a trend of consolidations in your industry? If so, this may increase the value of your business.

(more…)

Share Button

Do You Have to Take a 2012 Required Minimum Distribution?

Wednesday, January 23rd, 2013

ACT FAST: Limited Time Offer for RMDs

Thanks to a hot-off-the-presses provision in the new tax law, taxpayers over 70 ½ have a very limited window to address 2012 required minimum distributions (RMDs) from their retirement accounts.

Here’s what happened: an incentive for donating your RMDs directly to charity tax-free expired in 2011, so at the end of 2012 many of you weren’t sure what to do. Some of you may have taken your RMD as usual and used that money toward regular living expenses, but other retirees who typically donate their RMD to charity may have taken a different approach. (more…)

Share Button