Retirement Planning: Part 1
Posted on July 31, 2016 by bob in MoneyWise
People approaching retirement often must make a lot of decisions. While selecting the best option in each category can enhance one’s future financial situation to a meaningful degree, a bunch of sub-optimal picks will produce the opposite.
Among the challenges are:
A. Most people only face these choices once in life and may be unfamiliar with the implications and complications (including income tax consequences) of their decisions;
B. Some of the choices cannot be changed once they are made;
C. The sequence in which one evaluates the options and makes elections can be important.
Even identifying all of the decisions to be made so that they can be handled in a coordinated manner can be difficult. For that reason, this column provides a checklist of common retirement planning decisions that may impact you if you are at or approaching retirement.
Assets & Liabilities
θ How should I/we reposition investments as retirement nears or has occurred?
θ What should I/we do with assets in employer-sponsored retirement plans other than traditional pensions (401(k), profit sharing plans, etc.)?
θ What should I/we do with assets in taxable saving & investment accounts?
θ How much do I/we need to hold as a liquid reserve to handle emergencies?
θ What should I/we do about our home? Where am I/are we going to live?
θ What should I/we do about the home mortgage? Should I/we use a Home Equity Conversion Mortgage?
θ What should I/we do about any non-mortgage debt?
θ What should I/we do with other employer-sponsored benefit programs (life, disability or medical insurance, non-qualified savings programs, stock ownership, stock options, etc.)?
θ What should I/we do with individually-owned or trust-owned life insurance?
θ What should I/we do with any other assets owned in trust?
θ What should I/we do with any annuities?
θ Do I/we need to dispose of property or other assets that will be too expensive or difficult to maintain?
θ What do I/we do with any business interest that I/we own?
Income & Expense Planning
θ When should I/we start taking Social Security retirement benefits?
θ What elections should I/we make with benefits payable under any employer-sponsored traditional pension plan?
θ Will I/we continue to work and earn money during retirement? If so, what are the specifics—how much, how long, etc.?
θ How will my/our expenses change?
θ How will my/our income tax picture change?
θ How should I/we coordinate income to best advantage?
θ When should I/we stop working?
θ When should I/we claim any unused leave?
θ What should I/we do about Medicare and supplemental health insurance?
θ What should I/we do with individually owned disability insurance?
θ How will I/we spend our time and what are the associated costs?
θ Can I/we afford to retire?
θ How long will my/our resources sustain us?
θ What is my/our plan if our resources start running low?
θ What will I/we do in the event of a need for long-term care?
θ How will I/we handle requests for financial assistance from children and/or grandchildren?
θ If married, how do I make sure that my spouse has adequate resources if I die first?
Other
θ Is my will/Are our wills up to date?
θ Do I/we have a current durable power of attorney and advance healthcare planning documents?
θ Are my/our beneficiary designations appropriate for all life insurance, annuities and retirement accounts?
θ What financial legacy do I/we want to leave our heirs and how will that happen?
Given the complexity of the retirement planning and decision-making process and the risks associated with the consequences of the choices, many people choose to get professional guidance as they work through the process. Improving the quality of the decisions by even a modest degree, not to mention the “peace of mind” factor that everything has been reasonably addressed, can more than pay for the cost of competent, objective counsel. The more options and issues one faces, the less likely it is that retirement planning is a great do-it-yourself financial project.
Alan Wallace
Alan Wallace, CFA, ChFC, CLU, is a Senior Private Wealth Advisor for Ronald Blue & Co.’s Montgomery office, www.ronblue.com/location-al. He can be reached at 334-270-5960, or by e-mail at alan.wallace@ronblue.com. — (4417292-03-16)
