Financial Planning for Retirement

This is a quick guide for financial retirement planning, complete with plenty of tips and tricks to give you a headstart on your retirement!

Several years ago on a website for financial advisors, two authors, Betty Meredith and Kevin Seibert wrote a very detailed article on the “process of retirement income strategy”. It looks ominous and very methodical. It tries to systematize a very unsystematic phase of our lives.

But I will give them credit for the attempt.

It’s not something we don’t already know but it tries to get your logical side (left or right?) of the brain to think this through.

They break it down into these six steps:

  1. Estimate the duration of your retirement assets
  2. Identify and manage retirement risks
  3. Identify distribution, tax and estate issues, and opportunities
  4. Identify options for addressing gaps
  5. Convert assets into income
  6. Maintain and update the plan

Very impressive! It helps to take this unwieldy and unpredictable time of your life and give you what I think is a false sense of security that you’ve got a handle on this.

First of all, the primary fallacy is that you don’t know how long you will live. If you did, this would be a very simple process.

Secondly, you can “identify and manage retirement risks” only if you know what they will be. Even the internal ones (your health, your resources, and your income needs) are not decipherable for the moment or the near or far future. Knowing them and managing them are two entirely different things. Add to that the insanity of the outside world, (military conflicts, global warming and its shortages, energy issues, etc.) and you are clearly beyond the scope of any clear planning.

Thirdly, we cannot know what the federal government will do to raise much needed revenue in the future and the baby boomers with all the wealth will be a favorite target. What we know now about the tax structure may not be what it is five or ten or twenty years down the road. Buying assets intended to circumvent taxes may turn out to be the one asset they decide to tax at a full tax rate.

Fourthly, identifying the gaps and addressing them may be a very futile exercise. If you are unable to work or create income in retirement, why put emphasis on what you don’t have?

Fifthly, converting assets into income may be the only way to add to your income stream, most specifically the use of a reverse mortgage. Not a bad idea if your children never intend to move back into the family home. A very good idea. But if the asset you own is a commercial property, the market to sell that without selling the business that houses it may be an impossible task.

And lastly, reviewing the plan every year is a MUST. Given all the above, the need for constant attention to this financial situation is critical.

None of this financial retirement planning negates the need for a more specific financial plan, but trying to plan for all these contingencies is a fool’s game. It only works if you vigilantly pull out the weeds and support the growth at least annually.  It can be confusing, so feel free to reach out to us if you need some help navigating your financial retirement waters!

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