Planning for retirement is actually pretty simple. Just answer the question in the headline above with a resounding “Yes!” and you’re good to go. The problem is most people can’t do that. There’s always that little question mark at the end. It should really be called the “uncertain mark,” don’t you think?
Answering this question is actually very difficult. It requires asking about new obstacles you didn’t face while working, such as: Did I save enough money? Will I run out of money? When do I start Social Security? Which Medicare plans are best? How would I pay for long-term care? Should I pay off the mortgage? How do I take required minimum distributions (RMDs)? Should I take my pension in payments or a lump sum?
The list goes on and on.
So, how do you know for certain that you’ll be OK in retirement? I think I can help. I’ve scoured over 70 years of retirement research, identified risks in retirement and categorized them into five key areas to focus on. I call it our Smiling Through Retirement Process©.
1. Protect what you’ve saved.
Being retired means you aren’t saving anymore. You’re spending. And when you spend and lose money, bad things happen. For example, if you saved $1 million and need $50,000 a year in income, that’s 5%. If you lose 50%, you now have $500,000, but still need $50,000 a year. That’s not 5% anymore. It’s 10%. That’s too much, and you’ll most likely run out of money.
Safety with reasonable returns wins every time.
Sponsored Content
2. Have an income plan.
You need to know that you will never run out of money. To do that, you must have a detailed, all-inclusive income plan. It needs to provide certainty that you will never run out of money, no matter how long you live.
Sponsored Content
3. Work out health care options, including Medicare and long-term care.
Get your Medicare right, and you’re golden. Get it wrong, and you’ll forever pay too much and may not get the level of care you need.
Americans who turned 65 in 2021 have an 83% chance of needing some type of long-term care before they pass away. Not covering this risk is the fastest way to tank your retirement goals. There are several ways to cover this risk, not just one. And it can be covered at low or no cost.
If you don’t use it, you don’t lose it. And if you can’t medically qualify, there’s a way to cover this risk, too.
Sponsored Content
4. Reduce taxes you owe.
Paying too much in taxes in retirement is enemy No. 1. Who owns your 401(k) or IRA account? Did you say you do? Not quite. Meet your partners, the IRS and your state government (if you pay state income taxes where you live). Additionally, if taxes go up, they own more, and you own less.
Speaking of your-tax deferred money, do you think you’ll be in a lower income tax bracket come retirement? Again, not quite. When you pull that money out (which you are forced to do with required minimum distributions), you will be in the same or higher tax bracket than your working years.
But there’s good news. You can fix this problem. Fixing it means you will pay less taxes in retirement, have more money to spend and leave more money to your kids, mostly tax-free!
Sponsored Content
5. Put together an estate plan.
Everybody needs an estate plan, whether or not you have lots of assets. An estate plan controls things that happen if you become disabled or die.
If your disability is long term — and you don’t have an estate plan, or you have an improperly designed estate plan — the person you name to take care of your money can use your money only for you. So, if it’s your spouse, they cannot use your money for themselves, your kids or anything else. If they do, they can be removed and replaced with an attorney. Your family would pay big, unnecessary legal fees.
If you don’t have an estate plan, or it’s improperly designed, your money can end up in the wrong people’s hands. For example, if your kid gets divorced, half of the money you left for them and your grandkids will most likely go to their ex-spouse. Or, if your kid is at fault in a serious car accident and is sued, all your money could go to the victim’s family.
These terrible situations, and many others, can be avoided with a properly designed and implemented estate plan.
If you address each of the above areas going into retirement, you have done everything possible to ensure you’ll be OK for the rest of your life. Seeking guidance from a qualified financial professional and estate attorney is a great place to start.
Here’s to you living a Happily Ever After Retirement©!
RELATED CONTENT
Five Tax Moves Retirees Should Consider Before Dec. 31
Nervously Nearing Retirement? Four Do’s, Four Don’ts and One Never
To Create a Happy Retirement, Start With the Three Ps
Why Are You Still Working?
Five Common Retirement Mistakes and How to Avoid Them
The appearances in Kiplinger were obtained through a public relations 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.
Investment advice is offered through APO Financial Services, LLC (“APO”) 10155 Westmoor Drive, Suite 175, Westminster, Colorado 80021-262, an investment adviser registered with the Securities and Exchange Commission. Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services offered or that its personnel possess a particular level of skill, expertise or training. Important information and disclosures related to APO are available at https://apofinancial.com. Additional information pertaining to APO’s registration status, its business operations, services and fees, and its current written disclosure statement is available on the SEC’s investment adviser public website at https://www.adviserinfo.sec.gov.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Sponsored Content
-
Savings Goal CalculatorTools Want to know how much you need to save each month to reach your financial goals? Our calculator helps you build a realistic savings plan.
-
Cash vs. Mortgage: How to Pay for Your Second HomeShould you buy your second home outright or finance it with a loan? Weigh the pros, cons and tax implications before making the leap.
-
Gray Divorce Can Throw Your Retirement a Curveball: What to KnowIf you're entering retirement and going through a divorce at the same time, you've got some work to do to shore up your long-term financial security.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both WorldsBefore investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
How an Expired Passport Thwarted Blackmail (and What Other Important Documents You Should Keep)An optometrist produced his expired passport to foil a blackmail attempt by the daughter of a former employee. After proving he was out of the country on the date of a forged diary entry, he took it a step further.
-
Optimize, Grow, Retain: The Power of Annual Client ReviewsFinancial advisers can use annual reviews to help enhance client outcomes, strengthen relationships and build their practice.
-
I'm a Real Estate Investing Pro: This Is What Investors Should Know About Truck Stop InvestmentsTruck stops might seem like good investments, but they can actually be a risky gamble due to unstable fuel prices, unreliable operators and coming changes in transportation. Instead, consider safer options like industrial or residential properties.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
