FIVE WAYS TO A FAIL-SAFE RETIREMENT:
Watch for these things today so you’ll stay on track for tomorrow.
1ι STRESS-TEST YOUR PLAN FOR ECONOMIC SHOCK
It’s a hard lesson many retirees are still feeling from 2008: significant economic shock can seriously jeopardize the success of one’s retirement. Retirement requires that we draw from our years of saving, but it’s an action that only compounds the negative impact of declining markets. So, when a major economic shock occurs, you may be affected - but you don’t have to worry. Proper planning from the outset will make sure that your retirement will weather any unforeseen event, however significant it may be.
2Ι KEEP A CLOSE WATCH ON INFLATION
Many retirees are unaware of the impact inflation can have on their retirement. At a three percent rate of inflation, an individual will lose half of his or her purchasing power every 24 years. You might save $1 million today, only for it to be $500,000 down the road. Given the accommodative fiscal and monetary polices in the United States, be sure to consider what inflation might mean for your retirement plans.
3Ι DON’T OUTLIVE YOUR CASH
Simply put, people are living longer, and it’s putting them at a greater risk for running out of money in retirement. On average, today’s 65-year-old man lives to be 81, and a 65-year-old woman lives to be 85. Now, say you’re a 65-year-old couple - there’s a fifty percent chance that one of you will live to be 95. When you retire, make sure your savings will last for thirty to forty years. Don’t just plan to live long; be sure to prosper while you’re at it.
4Ι MAKE THE RIGHT TAX DECISIONS UPFRONT
As you transition into retirement, you have several decisions to make. Will you take your pension in the form of a lump sum or a monthly annuity? Will you roll over your 401k to an IRA or leave it with your employer? Will you exercise a Roth conversion or maintain a traditional IRA? If these decisions are made improperly, you could end up with significant tax penalties or unnecessary tax consequences. Your best bet is to consult a retirement and tax-law expert first - you’ll make smart decisions that will optimize your taxes over the long run.
5Ι STAY ON THE LOOKOUT FOR HIDDEN FEES
These days, Wall Street firms act as both broker and investment advisor, a dual role that allows them to charge commissions and fees. It’s no wonder, then, that retirees are often completely unaware of these extra costs. In this profit-driven environment, it’s imperative that you stay on top of hidden fees and conflicts of interest. Have an independent third party provide a free accounting of your investments. When you choose an advisor, take a close look at their regulatory record for customer complaints and disciplinary action.
The opinions expressed, and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. The opinions and advice expressed in this communication are based on The Mather Group’s research and professional experience and are expressed as of the publishing date of this communication. The Mather Group makes no warranty or representation, express or implied, nor does The Mather Group accept any liability, with respect to the information and data set forth herein. The Mather Group specifically disclaims any duty to update any of the information and data contained in this communication. The information and data in this communication does not constitute legal, tax, accounting, investment, or other professional advice nor is it intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation.
