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A Puzzling Retirement

A Puzzling Retirement

Clear Direction for Your Retirement:

A Puzzling Retirement

I read a tragic article this week about a woman in Oregon who had died homeless. As tragic as her death and plight was, what was more tragic was that the State had been looking for her for over a year to inform her that her mother had passed away and that she had inherited $884,000. It’s not that the money is more important than this women’s life but that the possibility existed that it could have changed her life perhaps even saved her life. If only she had known, we will never know the results unfortunately. 

To draw a very rough comparison, most people we consult with actually know what they have in terms of financial assets. However, it’s what they don’t know that may be killing them financially. Therefore, many simply take a “wing it” approach towards retirement, treading water in a current that is likely to pull them out to a sea of failure at worst and at best mediocrity. The good news in your story is that you have a life boat in the form of creating a financial retire-ment plan. 

We all make specific plans like going on vacation or building a home. Yet, many avoid planning for the “golden” years which typically means they end up not so golden. There’s an old saying, “if you don’t know where you’re going, you’re probably already there”. Think about that. 

Rather than fear the unknown, embrace and conquer it through getting the knowledge you need to take actionable steps forward. Have you ever worked on a jigsaw puzzle? Frustrating right? Retirement planning can feel like this to some degree. However, planning ahead can help make the task a little more manageable. Make sure you have all the pieces, find the edges first, follow the picture, etc. This takes time and effort on our part, but preparation is essential to success in any endeavor. 

Don’t get focused on financial products like many do. If an “advisor” discusses prod-ucts before doing any comprehensive and coordinated fiduciary financial planning you are simply being sold. Instead, focus on seeking to efficiently coordinate foundation-al elements of a solid financial retirement plan. Financial products are simply the tools that can help implement what’s found in the financial plan and it is not one-size fits all.

So let’s briefly look at the Five Critical Pieces of the Retirement Plan Puzzle. 

Income Plan

Income planning should actually be the primary driver for decision making in most of the other puzzle areas. It starts here. Two of the greatest financial concerns about retirement are 1) whether you’ll have enough income to retire, and 2) whether your in-come will last for your lifetime. So what is the specific plan for delivering that income over different time-frames in your life? Which assets should produce income first, which should take care of inflation and from which pot will you buy new cars or help out the grandkids? Identifying which assets you’re going to use at different stages allows you to identify where and how much to allocate to risk assets versus more stable and dependable income streams. Without a plan, most people make decisions out of the fear of not having enough and wind up taking on a lot of unnecessary risk in several of the other components.

Investment Plan

Once the plan for current and future income has been established, you can go about the work of removing as many unknowns as possible. Using the income plan as the template in which to drop in an investment strategy can be very liberating. By rede-fining the target – away from rate of return dependence to the degree possible – it allows you to think and proceed with much greater and specific intent in your selection of investments.

Tax Plan

Do you think taxes are going to increase or decrease over the next decade? I certainly don’t pretend to have a crystal ball, but I’d say the current state of affairs financially in the U.S. are going to play a large role.  So what’s your tax balance in terms of assets? 

How much is in tax-deferred vs after-tax or tax free buckets? Without preparation, you may find yourself with limited tax flexibility in retirement, not good. 

Estate Plan

How will you protect your savings for your spouse and heirs from a myriad of risks? The goal is not simply the legal avoidance of giving your money to the government. There are many aspects that allow you to simplify the transition while providing benefits to your family.

Insurance (Life & Health) Plan

Have you carefully considered potential health care costs and come to conclusions about how YOU are going to deal with them? If you retire early, what will you do about health insurance prior to Medicare? What about a potential nursing home stay; how’s that going to get handled? Is life insurance needed? If so, why? What’s the strategy?

If you are working with advisors who are regularly engaging you in conversations that lead to action steps in each of these previous areas, then you’ve truly found a real advisor. Absent of that leadership, you’re probably making purchase decisions – not financial plans. We can help.

I hope this is helpful to your retirement journey. Call us, come see us or visit us at www.woottonfinancial.com, we’d love the opportunity to help address your questions and concerns and provide you Clear Direction for Your Retirement®. 

Investment Advisory services offered through Game Plan Advisors, Inc., a registered investment advisor. Insurance services offered through Wootton Financial Group, Inc. Game Plan Advisors, Inc. and Wootton Financial Group, Inc. are affiliated through common ownership. Neither Game Plan Advisors, Inc nor Wootton Financial Group, Inc. offer legal or tax advice. Please consult the appro-priate professional regarding your individual circumstance. Not associated with or endorsed by the Social Security Administration or any other government agency.
Please consider the investment objectives, risks, charges, and expenses carefully before investing in Variable Annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options, can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.
Fixed Annuities are long term insurance contacts and there is a surrender charge imposed generally during the first
5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. With-drawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty.  Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.

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