Saturday, November 24, 2018

5 Things Every Retirement Plan Should Include

1. Establish assumptions:

  • Inflation: will erode your purchasing power over time so it is important that you factor an estimate for inflation into your projections
  • Rate of Return on your investments: Depending on your asset allocation you will also need to estimate how much you expect your investments to return
  • Your Target Retirement Date: Select a point in the future when you would like to leave the rat race and enjoy the freedom that comes with retirement
  • Your expected Life expectancy: Projections as designed to ensure your money doesn't run out. You can use your statistical life expectancy based on your current age or choose 90 or above.

2. Determine how much will you spend:

How will your expenses change in retirement? Some expenses will increase; like travel and entertainment, while others will decrease; such as income taxes and payroll deductions.
Use our Retirement Budget Worksheet to start anticipating your expenses.

3. A Proactive Approach To Decumulation of Your Retirement Savings:

Knowing how and when to start withdrawing from your investment savings is crucial for both tax planning and cash flow analysis. Working with a Certified Financial Planner can pay dividends in this area as they provide professional guidance as well as insight into your own personal situation. Deferring your registered savings into the future is a great way to increase your wealth over the long run.

4. An Audit of your overall Financial Health:

A second opinion from a Fee-Only Financial Planner is a great starting point for any retirement plan. The trouble is often in finding someone you can trust. Here is what to look for:

  • Fee Transparency: How is the advisor or planner paid to provide you with advice?
  • Conflict Free Advice: Does the advisor have to recommend products in order to be paid?
  • Fiduciary Responsibility: Are they required to work in your best interest?

5. Don't Ignore Estate Planning and Preservation:

What type of legacy are you hoping to leave behind to your heirs? What charities would you like donate to? How can you avoid a large tax burden on your estate? How do you want your assets distributed?  Having a proper Will in place can help you address these concerns and avoid the negative consequences of intestacy.

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