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What is Your Desired Retirement Lifestyle?

desired retirement lifestyle

Even though finances are important, life isn’t just about money. Rather than have your finances dictate your retirement lifestyle, your retirement lifestyle can help dictate how you plan for your finances. After all, two people with similar amounts of money could have completely different concepts of what constitutes their desired retirement lifestyle. No matter if your priority is traveling, working part-time for fun, or just enjoying your free time, it’s important to have a comprehensive financial plan in place. Whether you’re a few years from retirement or adjusting to retirement, spend time thinking about your desired retirement lifestyle.

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Spending Your Free Time in Retirement

If you’re planning on taking a vacation, it’s probably something that you’ve looked forward to for a while now.  And, that’s what retirement is about…  It’s your 30 or more year vacation.  Whether you’re traveling, volunteering, taking up new hobbies, or relaxing with friends and family, retirement is a time to unwind and do something you enjoy. One thing that’s great about life in retirement is the freedom you have to choose how you want to spend your time, and the people you want to surround yourself with. So, here are some potential ideas to consider when spending your free time in retirement.

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Lifestyle Tips to Consider for Retirement

You’ve worked the majority of your life, and deserve to have many blissful years ahead. With a proper plan and execution strategy in place, you should be on track to accomplish all of your retirement goals and dreams. If it’s been a little while since your last retirement review, then CLICK to request your complimentary, no-obligation meeting.

Here are 3, quick and easy lifestyle tips to consider for your life in retirement.

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4 Phases in Retirement

Everyone talks a lot about how to prepare for retirement financially, but there is less focus on how to adjust your mindset in retirement and manage expectations. You might not be happy every single day in retirement, but that doesn’t mean your retirement won’t be happy. Transitioning into retirement is no small task, and research shows that the way people feel about their retirements follows a u-shaped curve; first people are quite positive, then not as much, and then are positive again. It seems that there are 4 phases in retirement.

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Put Your Money to Work

You’ve worked for your money, and retirement is the time to have your money work for you. But what does this mean? Basically, your goal in retirement should be to turn what you’ve saved into retirement income. Many Americans are worried about running out of money since pensions are rare and there are reasons why you can’t rely solely on Social Security in retirement. But if you’ve saved a substantial nest egg of 1 million dollars, you can use these strategies to help make your savings last and put your money to work.

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Plan to Maintain Your Independence This 4th of July

Many Baby Boomers are watching their parents age to the point where they should move out of their home – and refuse. Maybe it’s that they are stubborn when it comes to their independence, or maybe they refuse to be a burden on their children. While these sentiments are admirable, older children can be faced with daily anxiety about their elderly parents’ wellbeing alone in their homes. At the same time, they can probably sympathize with the desire to remain in one’s own home, a comfortable and familiar environment where one is independent. If an elderly relative’s experience with aging in place has you thinking about how you will stay in your home, consider these home renovations. Even after the fireworks are over this 4th of July, you’ll be thinking about how to maintain your independence throughout retirement.

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Finding Happiness in Retirement

Finding Happiness in Retirement

There’s no doubt that our culture is obsessed with youth and often overlooks the benefits of aging. You may not have looked forward to getting older when you were younger, but now that you’re nearing retirement you may have gained a different perspective. The fact is, older Americans tend to be happier, according to a Gallup-Healthways poll that measured various aspects of well-being like sense of purpose, social relationships, financial well-being, community involvement, and physical health. There could be many reasons for these findings, from financial stability, to an active social life. However you plan on finding happiness in retirement, remember that aging is associated with an increased sense of well-being from a financial and emotional standpoint.

Older Americans were reportedly more satisfied with their standard of living and financial stability, and experienced less stress and worry related to these things. At a certain point in life, you learn that money doesn’t buy happiness, but it can make life easier and make you feel confident about your future well-being. When you begin planning for retirement, you may be surprised by how much wealth you’ve accumulated over the course of your career. It can be nice to know that you’ve worked hard to earn your nest egg, and can enjoy yourself in retirement without worrying about your financial stability.

Many say that people gain wisdom as they age. Part of being wise is understanding what makes you happy and orienting your life around those things. Older Americans were reportedly not only financially better off, but emotionally better off than those under 30. This was measured by asking people what they felt the day before: Smiling/laughing, learning/doing something interesting, being treated with respect, enjoyment, and happiness, or, sadness, anger and stress. Americans aged 60 to 99 were the age group most likely to be emotionally well off. The great thing about retirement is that you have the time to pursue activities you find interesting and enjoyable, be it spending time with your grandchildren, traveling, or volunteering.

After some people retire, they may feel a loss of purpose when they no longer have regular career-related goals to accomplish. Becoming involved in their community could be a solution if you want to enhance your happiness in retirement.  Community involvement may play an important role, as another study shows that Americans who receive recognition from their communities have a higher well-being. Volunteering and community involvement are important parts of retirement for some people who are interested in aging in place and want to use their free time to help others and improve the place they’ve called home for many years. And, Americans who have received recognition for their work are less likely to experience worry and stress.

Here at Peak Financial Freedom Group, we know how important your retirement is. After a successful career, retirement can be a time to slow down, enjoy what you’ve earned, and focus on your family, friends, and community. We can help you plan for a long retirement with a comprehensive plan that takes your unique goals into account. Click here to schedule your no cost, no obligation financial review today.

How to Pass on a Retirement Account

How to Pass on a Retirement Account

Estate planning is complicated: The fair decision may not actually be the most practical one. What does this mean? It means that even if you divide up your estate equally between your beneficiaries, they could get hit with unequal tax burdens. So, good estate planning requires more than just good intentions. If you plan on leaving a legacy, you should take each of your beneficiary’s finances into account when dividing up your assets.

Estate planning is so crucial because when a beneficiary inherits an investment account, they also inherit income tax liability. When someone inherits an IRA, they will owe federal and possibly also state taxes on the funds for as long as they make withdrawals. When someone inherits a taxable investment account, they pay taxes annually on interest and dividends in addition to capital gains. When it is passed on, unrealized gains are eliminated for the beneficiary, allowing the beneficiary to inherit the account with no income tax liability.

These facts matter even more if the beneficiaries are in different tax burdens. For example, if one beneficiary is in the 35% tax bracket, and another is in the 10% bracket, the first could end up with tens of thousands less than the second if they inherit equal amounts from an IRA because of their different tax burdens. To minimize taxes, the first beneficiary could inherit assets from taxable accounts, and the second could inherit IRA funds. On face value, these might be unequal amounts, but when each beneficiary’s tax burden is taken into account, the overall tax burden and the difference between what each end up with could be significantly reduced.

If you want to take on the tax burden instead of leaving it to your heirs, you can convert to a Roth IRA during your lifetime. Considering the relatively low tax rates and recent market volatility, you might be considering if now is the time to convert to a Roth IRA. That way, funds can continue to grow tax free in the account, even after it is passed onto a beneficiary.

Discussing how you will distribute assets with your beneficiaries can help avoid conflict between them if it appears that one is receiving more than the other. Explaining the complexities of tax burdens and taxable accounts versus tax advantaged accounts can be a good idea if you’re distributing your inheritance unequally.

Most importantly, be smart about your estate planning so that what you’ve earned gets passed on to the people who are important to you. The best plan isn’t always the simplest, so consult the professionals at Peak Financial Freedom Group. We can help you divide your retirement accounts and assets among your beneficiaries. Click here to visit us online and schedule you no cost, no obligation financial review today.

Don’t Let Market Volatility Ruin Your Retirement

Don’t Let Market Volatility Ruin Your Retirement
Now that you’re nearing retirement, the term “market volatility” might stir up different feelings than it 30 years ago. Older workers and retirees understand that they have less time to make up for losses in their investments and to ride out future market crashes than they did when they were younger. And with life expectancies increasing, leaving your financial wellbeing up to the whims of the market seems like less and less of a good idea. We know that there will always be crashes, even if no one knows exactly when they will come, so why not develop a plan ahead of time?

After a crash, people may be tempted to sell their stocks if they panic, or need immediate funds. But in doing so, they ensure that they won’t see the stock appreciate when the market recovers. In order to keep this panic at bay, you can think of creating your portfolio around the idea of retirement income.

Creating reliable retirement income can be a good retirement strategy for high-income earners. The first step would be to create guaranteed retirement income with “safe” investments. The value of bonds and savings account are not seriously affected by the ups and downs of the market, and reliable paychecks include Social Security, annuities, and bond ladders. Certain annuities will also protect against outliving your retirement savings.

After covering your basic needs with safe investments, you can look to grow the rest of your savings more aggressively. You can think of the funds generated as “retirement bonuses.” These “bonuses” can be used for non-necessities like travel, spending of grandchildren, and the activities you want to enjoy with your free time in retirement. You can develop a withdrawal plan based on market performance, meaning decreased withdrawal amounts when the market drops, and increased amounts when it experiences gains.

It’s also important to create an emergency fund for events like unexpected medical expenses and home and car repairs. This fund will be separate from your first two funds, so if there is an emergency you will not have to disrupt the overall structure of your retirement plan by dripping into them.

The term “market volatility” probably doesn’t create good feelings if you’re nearing retirement or already retired. Developing a plan for periods of market volatility before they happen can help you weather storms.

You don’t know when the next crash is, but you can plan for it. Click here to schedule your complimentary review today, and let the professionals at Peak Financial Freedom Group help you create reliable retirement income, sources of growth, and an emergency fund for a rainy day.

Have a Retirement Account? Be Prepared for Your RMDs!

Have a Retirement Account? Be Prepared for Your RMDs!

If you’ve contributed to a 401(k) or IRA, you should prepare a strategy for your RMDs (Required Minimum Distributions). After many years of enjoying tax free growth, your retirement savings from non-Roth (i.e. traditional) accounts will eventually be subject to tax. Rather than be caught off guard, take control and learn the ins and outs of your RMDs so you can avoid penalties, and determine the best strategy for re-distributing your RMDs.

Required minimum distributions from your IRA, Simple IRA, SEP IRA, or retirement plan must begin at age 70 ½. You have to take an RMD from your traditional IRA by December 31st, except for your first one, which you can delay until April 1st of the following year. However, this means that you’ll have to take two distributions in one year, which could push you into a higher tax bracket, contributing to your tax burden in retirement. You can either withdraw the entire amount from one IRA, or spread it out over multiple accounts. The rules regarding RMDs for traditional 401(k)s are similar, except that you must take an RMD from each 401(k) you own, and you don’t have to take an RMD if you’re still working in your 70’s.

One reason why it’s so important to know the rules regarding RMDs is that the penalty for failing to take them is equal to 50% of the amount not withdrawn. So, the question becomes, what do you do with your RMDs? You can take an RMD in cash, but you can also transfer the funds to a stock or mutual find. You can’t roll over the RMD into another IRA, although you can reinvest it using a taxable account. You must take an RMD before rolling over funds from a traditional IRA or converting to a Roth. You can also donate up to $100,000 from an IRA directly to charity. This way, the donation doesn’t count towards your adjusted gross income.

It’s not necessarily true that all of your RMDs will be taxed. If you made a non-deductible contribution to your IRA, then part of every withdrawal will not be taxable. However, you must know and indicate which portion of the withdrawal was nondeductible. If you look at a Form 8606 you can see what percentage of your IRA is made up of nondeductible contributions. That is the percentage of each withdrawal that will not be taxed.

Your IRA and 401(k) are important components of your retirement plan, so make sure you have a strategy in place for withdrawing from them. Rolling over an RMD into a Roth, reinvesting it in stocks or mutual funds, and donating directly to charity are some options. There are many ins and outs of RMDs and high penalties for failing to take them, so don’t be taken by surprise.

The rules surrounding RMDs can be complicated, so contact the professionals at Peak Financial Freedom Group before you’re 70 ½. There are ways to minimize your tax burden, and put your RMDs to good use. Click here to schedule your no cost, no obligation review today.

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Peak Financial Freedom Group
2520 Douglas Boulevard, Suite 110
Roseville, CA 95661

DISCLOSURE: All presentation data is provided and intended to be used for general educational purposes only and is not intended as a solicitation for you to buy or sell any financial product. None of the material in this presentation is intended to give you, nor are the presenters engaged in giving you, specific tax, investment, real estate, legal, estate, retirement, or financial advice, but rather to serve as an educational platform to deliver information; nor is it intended to show you how the strategies presented can specifically apply to your own tax, investment, estate, financial, or retirement position, but rather to offer an idea of how these principles generally may apply.

Stocks, bonds, or mutual funds have risks and can lose principal, even with a stop loss, and there is no guarantees of gains, as past performance is not indicative of future positive investment results. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund a new portfolio and/or annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. You can’t invest directly into a stock market index. A fixed index annuity with an income rider can protect your savings from losses and provide you guaranteed lifetime income, but you could incur surrender charges, gains aren’t guaranteed, you’ll pay a fee, and guarantees are backed by the financial strength claims paying ability of the issuing annuity company.

Illustrations/projections displayed within this presentation are hypothetical in nature and should not serve as the sole determining factor in making financial decisions. Consult with a qualified investment, tax, legal, and/or retirement advisor before making any decisions. By contacting Peak Financial Freedom Group, you may be offered additional information regarding the purchase of financial products. Seminars, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC. If you place assets under management with our firm, we are paid an advisory fee, and if you purchase an annuity from our firm, we are paid commissions from an insurance company.

Investment Advisor Representatives of and Advisory Services offered through Fiduciary Solutions, LLC, a Registered Investment Advisor. Peak Financial Freedom Group LLC is primarily a fixed insurance sales organization and provides no Advisory Services. PFFG Insurance Agency LLC, CA License #0N14103, is a licensed insurance agency and provides no Advisory Services. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are separate affiliated entities. Insurance products and services provided by PFFG Insurance Agency LLC and independent agents.

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