When it comes to planning for retirement, it’s easy to get overwhelmed. Putting together a financial strategy can be complicated at any time of life, what with changing regulations, ups and downs in the market, and disagreements — even among the better-known investment advisers — about the best ways to save and spend money. But the closer you get to actually stopping that regular paycheck, the scarier things can get.
More than half of pre-retirees report feeling anxious about their impending retirement and worry they will run out of money.
What did they say made them feel more confident? Having a plan in place.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you’re ready to take control, talk to a financial adviser about these four financial planning essentials:
1. Put a tangible and comprehensive retirement plan in place.
Find a financial adviser who specializes in advance planning — not just investment planning, but also income planning (making sure you’re paying yourself the right way in retirement), tax planning strategies (minimizing your exposure so you’re not paying more than you have to), health care planning (finding the right Medicare plan for you and considering your long-term care needs) and legacy planning strategies (assuring your assets will pass efficiently to the people and/or charities of your choice). Then gather up your paperwork and get ready to get comprehensive.
2. Make sure your plan includes transitioning from growth to income investing.
People tend to get stuck in one investing strategy. They spend so many years trying to accumulate money, they forget to make the shift from the growth phase to the income phase when they retire.
One common mistake is to start taking systematic withdrawals — a set dollar amount — without changing to an income-type portfolio. That’s fine if the market is up: You make money, you take money — no harm, no foul. But if you’re pulling out money in a down market, you’re increasing the odds of running low on — or out of — funds.
Rework your plan to preserve your money as the years pass.
3. Be aware of fees and overpaying to own your investments.
Imagine you’re on a cruise and there are icebergs in the water. You know what’s above the water because you can see it, but you have no idea what’s below the surface. It’s the same thing in the financial planning industry: Advisers’ fees or the stated expense ratios on mutual funds are above the water and pretty easy to spot. But you really don’t know what’s below the surface unless you have a thorough evaluation of your portfolio.
People will come into our office for a consultation and tell us that they're paying just 1% to their advisers. But what they don't realize is that their portfolio is getting hit with another 4% or 5% in additional mutual fund costs or other expenses. Making sure your underlying investments are as cost efficient as possible is going to put more money in your pocket.
4. Consider a retirement income annuity to create a pension-like income in retirement.
A lot of people are retiring without a pension today. But they do have 401(k), 403(b) or 457 plans, and when they retire, they can use that money to create their own pension. Properly structured annuities with income benefits are the only investment that can make it unlikely that you will run out of money for as long as you live. Look for one that has an inflation hedge, so you don’t buy into a set figure today that won’t be enough if you live 20 or 30 years in retirement.
After all, a long retirement should be your goal — not your worst nightmare.
Kim Franke-Folstad contributed to this article.
Securities are offered through GF Investment Services, LLC, Member FINRA/SIPC. Investment advisory services offered through Global Financial Private Capital, LLC, an SEC registered investment advisor.
Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Global Financial Private Capital or GF Investment Services.
This is provided for informational purposes only and is not intended to provide specific tax or legal advice or serve as the basis for any financial decisions. Be sure to speak with qualified professionals before making any decisions about your personal situation.
The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.
-
4 Money Habits Boomers Swore By That Millennials Are Walking Away FromMillennials are trading tradition for flexibility when it comes to building wealth.
-
Abu Dhabi Adventures: New Thrills, Iconic Sights and Disney’s Latest ParkDiscover the mix of culture, wildlife and modern marvels that make this Middle Eastern city a destination to watch.
-
How Much Do I Need to Retire? A Financial Professional Breaks Down Your OptionsWhat it all boils down to is will you be comfortable in retirement? Some people may rely on formulas, while others just aim for $1 million nest egg.
-
Despite Our Grumbles, America Still Delivers on the Dream: Perspective From a Financial Pro Who's Seen StuffSome of us might complain about the state of our nation (and those concerns are legit), but America still offers unparalleled opportunities and mobility that many people around the world only dream about.
-
When You Need Capital Quickly, Think 'Ready, Set, Fund': A Financial Adviser's StrategyInvestors must be able to free up cash to meet short-term needs from time to time. This strategy will help you access capital without derailing your long-term goals.
-
I'm an Estate Planner: Moving Family Assets to a Safe Haven Abroad Could Be a Huge Headache for Your HeirsIn troubled times like these, wealthy clients may seek financial refuge outside of the U.S. But that could cause more tax and estate problems than it solves.
-
Fall Is Tax Time? Yes! Act Now to Make Needed AdjustmentsReview your withholdings, contribute to tax-saving HSA and FSA accounts, manage a bonus' impact and adjust for major life events such as weddings and job changes.
-
Board Service in Retirement: The Best Time to Join a Board Is Before You RetireMany senior executives wait until retirement to take a seat on a corporate board. But making this career move early is a win-win for you and your current organization.
-
A Financial Professional's Take on Long-Term Care Insurance: Buy or Not?Unless you have about $6,000 burning a hole in your pocket every month, you should make a plan in case you need long-term care. Luckily, you have options.
-
How to Unearth Sustainable Investment in Mining: A Financial Professional's GuideMining is likely to play a critical role in the global transition to more environmentally friendly energy resources. Here's how you can balance the opportunities and the risks.
