Preparing For Your Retirement

1. Understanding Retirement Needs: Planning for retirement involves setting a specific, realistic financial goal, how much money is needed, and what lifestyle is desired.

2. Common Rules of Thumb:

   • 25x Rule: Multiply annual expenses by 25 to determine the nest egg needed for financial independence, though it doesn't account for taxes, inflation, or market fluctuations.

   • 4% Rule: Suggests withdrawing 4% annually from a portfolio, but has limitations, such as not considering the growth of the entire portfolio or individual retirement goals.

   • Replacement Income Rule: Many use the 70-80% of pre-retirement income as a target, but this doesn’t account for increased spending in retirement, especially for those planning more leisure activities.

   • While these can be good rules to start, there is often more nuance in your retirement picture than a simple rule can encompass. We can about this more in depth in our video!

3. Retirement Spending Phases:

   • Go-Go Years: Early retirement when spending may be higher due to travel and home improvements.

   • Slow-Go Years: A phase where spending may decrease as people are less active and have fewer large expenses.

   • No-Go Years: Later retirement years, where healthcare costs increase and discretionary spending may decrease.

4. Healthcare and Long-Term Care: Proper planning for healthcare, especially long-term care, is essential as costs rise over time. It's vital to consider Medicare options and potential long-term care insurance or self-insurance strategies.

5. Longevity and Taxes: Assuming longer lifespans (e.g., living to 95) is a prudent approach to ensure a secure retirement. Taxes also play a big role in planning, and strategies like Roth conversions can optimize tax efficiency.

6. Mindset Shift in Retirement: Transitioning from accumulating savings to spending them can be challenging. It’s important to help clients feel confident in using their savings without fear of running out of money.

7. Personalized Retirement Plans: Every client’s plan should reflect their goals and lifestyle preferences. Engaging in regular conversations about retirement needs and projections, along with flexibility for changes, is key for long-term success.

8. Tax-Efficient Strategies: Drawing funds from taxable, tax-deferred, and tax-free accounts in a strategic way can minimize taxes and help clients enjoy their retirement.

Ultimately, retirement planning should be tailored to individual goals, factoring in spending patterns, taxes, healthcare needs, and longevity. This is where we come in to customize your retirement plan to what you find valuable and how you want to spend your retirement years.