Planning for retirement requires the individual to take a realistic approach when choosing a lifestyle and managing their wealth. A comprehensive retirement plan includes enough proceeds to accommodate the person’s ideal lifestyle. When they retire, the individual needs enough money to cover living expenses and entertainment. Moreso, that plan should include an increasing income in order to keep up with inflation and the cost-of-living for the preferred retirement location. 

A retirement planner can help you create better plans for retirement and help identify how to generate adequate funds to cover both current and future expenses. The earlier you start planning, the more time you will have to work with, meaning smaller “course corrections” can still make your retirement significantly more comfortable. However, it’s never too late to start saving for your future. By reviewing how to get started, we can find the best solution for your retirement expenses.  

Identify All Income Sources

When retirement planning, the client starts by identifying all income sources and assets from which to take distributions. Planning when and where to pull money from each month to pay the bills must consider numerous factors such as market risk, timeline for utilization, the tax treatment of the distribution, and the pace of distributions.

Income sources for retirees include pensions, alimony, child support, and dividends from stocks or distributions from other investments. By finding the right percentage to save into each of these asset types during your career, you can generate an adequate amount to sustain your lifestyle during retirement.  

Estimating Your Expenses

With a retirement plan, pre-retirees and retirees work with the team at Walker Capital to determine how much money they will need for living expenses after entering retirement. They must determine if their mortgage will be paid off by the time they retire and if they plan to continue living in that property.  Will they downsize?  Relocate?  Incorporate a bucket-list budget?

When calculating expenses, the client needs to determine how much they’ll pay for utilities, groceries, health insurance, and entertainment. If you want to travel during retirement, you need to calculate how much to spend each year on travel without overextending your budget. 

Understanding Your Assets

When preparing for retirement, it is important to create a complete list of assets and any financial resources that can help one sustain their retirement lifestyle. As you create a diversified portfolio of assets, pay specific attention to the relationship between the timeline for when a particular asset will be utilized and how much risk that asset is taking.  As the timeline for an asset to grow (or recover after a market downturn) is reduced, so too should the amount of risk (or market volatility) that that asset is exposed to.  Managing multiple timelines for your retirement nest egg can be one of the most difficult components of retirement planning – especially as market volatility drives many investors to make emotional decisions.

Retirement planning is a great way to determine what to do with assets and how these assets can generate funds for retirement. If you decide to sell some assets or properties, a retirement planner can explain the best practices for tax-efficiently re-employing the proceeds to help sustain your retirement.  

Setting Up a Plan to Manage Tax Implications

When withdrawing funds from a retirement plan, there are commonly tax implications for that year when it comes time to settle up with the IRS. By setting up a plan that considers today’s tax rates and how they compare to projected future tax rates, you can position your retirement funds to emphasize tax-diversity as they’re withdrawn. Walker Capital can help you understand roughly how much you’ll pay each year in taxes whether simply taking withdrawals to pay the bills or looking to do Roth Conversions to further emphasize tax diversification.

The Generational Legacy Phase

As you progress through retirement, assets that are intended to be passed down to another generation are earmarked for use in the generational legacy phase. The retirement planner can help you create a plan for how to pass their wealth tax-efficiently to the next generation. Retiree’s who anticipate leaving a legacy will create a plan to evaluate how they want to distribute their wealth and if they want to donate any assets or their wealth to a charity. Legacy planning is somewhat similar to an estate plan, but the owner makes decisions based on what they want their legacy to be. 

Where to Get Planning Services

Walker Capital offers exceptional retirement planning services for Federal Employees, Business Owners, and their families. We have a long history of creating comprehensive retirement plans for government employees and exit strategies for entrepreneurs nearing retirement. By calculating projected living expenses, how much they want to travel each year, and other expenditures, the client can begin to create a plan that allows them to enjoy retirement confidently. 

Retirement planning services are highly beneficial to anyone who wants to generate enough wealth to maintain a certain lifestyle. The planning opportunities address better ways to save money before retirement and how to manage tax implications as the individual withdraws money from their accounts. Savings plans and retirement funds are ideal ways to generate wealth for your later years.