Questions You Must Be Able to Answer to Have a Successful Retirement

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Do You Have Responses to these Critical Retirement Planning Considerations?

All retirees have their own unique beliefs about what a successful retirement looks like, yet too many are unable to answer important financial questions about achieving that success. And, when you can’t find answers to your most pressing money questions, it’s difficult to feel financially secure.

In our 50+ years of experience, we’ve come to realize that there are nine specific questions you need to be able to answer about your money in order to plan – and achieve – a successful retirement:

  1. How much money can you safely take out of your assets for income?
  2. How long will your money actually last?
  3. Can you guarantee you will never run out of money?
  4. How can you protect your assets from volatility and losses?
  5. How much income tax will you pay on your income distributions?
  6. How much will you lose if the market takes another big drop?
  7. Is it OK to start spending some of your money?
  8. What are the total fees you are really paying and how can you reduce them?
  9. What is going to happen if you or your spouse pass away?

If you can’t answer these nine questions, it means your retirement planning is based on hope and luck – not the best recipe for success. Read on to learn Momma’s Secret Recipe, instead.

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Retirement Planning in a Volatile Market

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The recent market volatility may have you concerned, especially if you’re approaching or already in retirement.  Feelings of uncertainty, anxiety, and uneasiness are all common during any scary and volatile market.  These feelings are normal and sometimes it can be beneficial to take a step back and look at the big picture.  We can’t predict the markets, so acting with haste and making emotional decisions can potentially negatively impact your retirement outlook.  Make sure to remind yourself of the reasons you’re planning and investing in the first place.  Focusing on your priorities and unique goals can help you put your market exposure and risk tolerance into perspective.  Now that you’ve done this, you can focus your time and efforts on what’s really important.

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Make the Most of Your 401(k)

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We all know that a 401(k) is one of the most important retirement planning tools we have: The potential tax benefits and power of compound interest can make it a great savings and investment tool for anyone who practices financial discipline and contributes regularly. But your contributions aren’t the only things to consider when figuring out how to make the most of your 401(k).

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Don’t forget about Your Old 401(k)s

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Do you have multiple 401(k)s? If you left your money in a former employer’s 401(k), you may want to reconsider as you near retirement. According to the Bureau of Labor Statics, Baby Boomers have held an average of 12 jobs by the time they turn 50. When you leave a job, the money you contribute to your 401(k) is still yours, and you may also be able to keep your employer’s contributions depending on your vesting schedule. There are a few options for your old 401(k)s: You can cash out of the plan, leave the money in the plan, rollover the money into your current employer’s plan, or roll it over to an IRA. All of these options have different advantages, so don’t forget about your old 401(k)s as you approach retirement.

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Small Steps and Giant Leaps Toward Retirement

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July 20th marks the 50th anniversary of the moon landing. In the middle of summer vacation, Baby Boomers gathered around their TVs to watch Neil Armstrong take one small step for man and one giant leap for mankind. This milestone in human history marked many Americans’ upbringings and identities in a significant way. It was a testament to the power of human ingenuity and perseverance, and the ability of America to reach its loftiest goals. Putting a man on the moon probably seemed impossible to many when President Kennedy promised we would in 1961, but it happened. Right now, your retirement goals might seem out of reach, but with perseverance and a good plan, they can be attained.

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Retirement the Machiavellian Way

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When someone says “Machiavellian,” you might think of a lying schemer, a power-hungry politician, or ruthless individual who believes the ends justify the means. But this characterization isn’t quite fair to the political philosopher Niccolo Machiavelli. He gave practical advice to the prince of Florence about how to rule, and was concerned with him being successful, not evil. Possibly his most important piece of advice was to focus on what you can control, not on matters of chance.

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Are You Ready for Endless Summer?

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It’s time to start planning your summer, and whether you’re going to laze around on the beach, visit friends, or take a trip, it’s important to also start thinking about your retirement plan. On average, we spend more time every year planning for vacations than planning for retirement – and retirement is much longer than any vacation you will take. Summer is definitely a time to relax, but it’s also the perfect time to think about what you want your future retirement, the endless summer, to look like.

Start off with the “What”

If you and your spouse are traveling together, use the hours on the plane or highway to start discussing what you want your retirement to look like, your goals, and general timeline. If you have time off, you can “practice” retirement by trying out new activities like volunteering, spending more time with friends and family, or picking up a new or forgotten hobby, it can be a good way to plan how you will fill your time and find happiness in retirement. Consider if you want to travel a lot when you first retire and if you will move. Once you have a vision for your retirement, you can move onto figuring out how much it will cost.

Move on to the “How”

Think about how you afford the vacations you currently take: Do you save for them, or have a specific vacation budget? Planning for how you will afford retirement is a much more detailed process, which is why it helps to have a professional at your side. Start thinking about how much your desired lifestyle in retirement will cost you, and then begin calculating how much you will need to withdraw from your retirement accounts. It’s also important to consider any income from your investments, and plan for when you should start taking Social Security.

Think of all the details that go into planning a vacation: There are the travel arrangements, the hotel, activities, and setting a budget. While it’s certainly important to enjoy both vacation and retirement, the stakes are much higher when it comes to retirement and there are even more elements that go into planning this 30-plus year vacation.

Here at Peak Financial Freedom Group, we can help you create a plan for the longest vacation of your life. We’ll take your unique retirement goals into account, and help you put all the pieces of the puzzle together. If you’re taking the time to plan a vacation this summer, consider also taking the time to come in for a no cost, no obligation financial review.

What is a Phased Retirement Program?

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Some look forward to their last day of work, some are disappointed to leave coworkers and a purposeful career, and others are somewhere in between. There are many things to love about retirement, like the freedom to travel, spend time with family and friends, and just wake up whenever you want, but hopefully there are also things you love about your career. For people who experienced a sense of accomplishment from their work and like to be busy, suddenly having little mental stimulation can be less than ideal. One solution is to phase from full-time to part-time before retirement.

Transitioning to part-time employment can give you some of the freedom of retirement while keeping familiar routines and relationships in place. It can help you figure out a plan for what you will do with your time after retirement before you actually retire, since transitioning into retirement is no small task. Unfortunately, only 5% of companies offer a formal phased retirement program according to a recent Forbes article. So, if you want to officially transition to part-time before retiring, you’ll probably need to forge your own path.

If your company doesn’t have a formal phased retirement program, you can prepare a proposal for your part-time schedule. Plan which tasks you will still handle and how you will still do them with a reduced schedule, and how you will pass on your expertise, insights, and connections to younger coworkers. It’s important to emphasize how your skills and knowledge can still benefit your company even if you won’t be there full-time. Also articulate how stepping back from your role might give younger workers the opportunity to assume leadership roles while still benefiting from your mentorship.

Formal phased retirement programs are rare, but that doesn’t mean there’s not an interest both on the employee’s and employer’s sides. If you don’t think your company’s culture will be amenable to your request, you can see if any of your colleagues are also interested in transitioning to part-time. A group is likely to gain more traction and share ideas about the logistics of reducing hours and workload.

One crucial thing to consider if you will receive a pension is how working part-time will affect your benefits. Salary just prior to retirement is typically a factor in determining a pension benefit. And, benefits such as healthcare and paid vacation time could also be affected.

Here at Peak Financial Freedom Group, we can take your unique retirement goals into account when helping you create a comprehensive retirement plan. When and how you retire are important, and the decisions you make leading up to retirement can affect you for decades to come. If you’re ready to start planning for the future, click here to sign up for a free financial review. 

Life in 2050

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2050 seems like a long time away, but 2019 seemed far away in 1989. Back then, did you think a cell phone would fit into your pocket? Or that you could shout at Alexa to order you more paper towels without getting off the couch? Technology has transformed the way that we live over the last 30 years, and there’s no telling how it will change life by 2050. Here are some predictions for what your retirement in 2050 could look like.

By 2050 there will likely be 9 billion people on earth, and the majority will live in cities. Our cities may not look like a science-fiction fantasy, but virtual and augmented reality will transform the way we get information and interact with our surroundings. The augmented reality market is expected to reach $55 billion by 2021 and there is increasing demand for augmented reality in healthcare, construction, retail, and e-commerce. For example, augmented reality will help engineers and architects see what a building project would look like before it’s built and make alterations to the plans ahead of time. This will mean our cities can be built faster and better.

The population will have a higher average age due to increased lifespans. Scientists predict that on average, women will live to be 89 to 94 and men will live to be 83 to 86 by 2050. Expert foodies are hopeful that there will be less factory farms and more small and regional producers. If this is the case, it will be easier for people to eat fresh, local food instead of processed food. This could not only contribute to your happiness, but your health as well. A longer life is a gift, but one you must plan for: Think about if your nest egg will support you in the year 2050 and beyond. An evolving retirement plan could be necessary if your retirement is going to last 30 plus years.

The healthcare industry may also focus more on individual health in relation to happiness, and general wellness. There are already breakthroughs in the fields of gene therapy and personalized medicine. Medical advancements come at a cost, and there is already a rising cost of healthcare in retirement that you should plan for. A solid retirement plan anticipates the costs that Medicare care will not necessarily cover.

There are many reasons to look forward to the future, and also reasons to worry. There’s no telling how retirement could be different in 2030, let alone 2050. If you’re concerned about outliving your nest egg or market volatility, contact the professionals at Peak Financial Freedom Group. We can help you create a retirement plan that makes you look forward to your future. Click here to schedule you no cost, no obligation financial review today.

Check Your Blind Spots When Planning for Retirement

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It’s not enough to save for retirement, you have to plan for it. And planning for retirement is more than deciding where to go on a trip or when to start collecting Social Security – it’s anticipating your healthcare needs as you age, including your long-term care needs. These are often distinct from medical costs, and include help with daily activities like bathing, housekeeping, and mobility. Since most long-term care costs are not covered by Medicare, they can end up in our blind spots when we’re planning for retirement.

Many Americans don’t consider the fact that they will likely require some form long-term care during their lifetime. In fact, 70% of people aged 65 today will, according to the government. This means that even if you don’t end up needing long-term care, your spouse probably will. And according to a Bipartisan Policy Center report, a 65 year old today can expect to spend $138,000 on long-term care costs over their lifetime. Even if you’ve taken the rising cost of healthcare in retirement into account, you may not have considered that the average cost for a year in an assisted living facility is $45,000 and a year in a nursing home is $97,000.

There are a few different ways to pay for long-term care such as Medicare and Medicaid, traditional long-term care insurance, and using your personal savings. There are a few long-term care myths, and one is that all costs are covered by Medicare. Medicare only provides limited benefits for long-term care, and does not cover extended stays in nursing homes or non-skilled living assistance. Medicaid benefits are typically only available after you’ve depleted your savings.

Long-term care insurance is becoming more expensive, but if you already have a long-term care policy, it is typically less expensive to keep it rather than buy a new one. The older you get, the more expensive a policy tends to be. If you don’t have a policy and plan on using your savings, keep in mind that withdrawing large amounts from your traditional retirement accounts may have a significant impact on your taxes.

It’s likely that relatives will be involved with long-term care, whether by contributing money, time, or making decisions on behalf of the person needing long-term care. That’s why it’s important to start planning now with your relatives and a financial planner to avoid placing too large of a burden on your family members when it comes to daily activities like bathing, housekeeping, and mobility.

At Peak Financial Freedom Group, we can help you take long-term care costs into account when creating a retirement plan. There may be many retirement costs in your blind spot, and long-term care is a significant one. Don’t wait until you need long-term care to figure out how to pay for it, click here to schedule your no cost, no obligation financial review today.