Are You Risking Your Retirement with These Two Investment Myths?

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Pervasive Misinformation Could Cost You in Retirement

In our many years working with clients, we have noticed a disturbing trend: most people are investing based upon two faulty premises, both of which are pervasive myths and neither of which are in an investor’s best interest:

  • The Myth of “Riding Out the Market”
  • The Myth of Getting a “10%+ Annual Return”

Have you heard these? Are you investing based upon them? If so, you’re not alone. However, we’re here to tell you that these myths are old-school and outdated, and they aren’t serving you as well as you may believe.

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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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What is Your Desired Retirement Lifestyle?

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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

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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

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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

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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

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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

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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

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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

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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.

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

All of the information presented here is provided and intended to be used for general educational and informational purposes only and is not intended as a solicitation for you to buy or sell any security or financial product. The content is developed from sources believed to be providing accurate information. None of the information presented is intended to give you specific tax, investment, real estate, legal, estate, or financial advice but rather to serve as an educational platform to deliver information. The ideas, thoughts, and strategies presented here are those of the Management Team and provide an insight to our views on Peak Financial Freedom Group, LLC. Some of this material was developed and produced by Peak Financial to provide information on a topic that may be of interest. Every detail in this website is subject to change without notice. Seminar, radio shows, TV productions, book releases, magazine and book promotions are sponsored, promoted and paid for by Peak Financial Freedom Group, LLC.

2nd Opinion Package available to Qualified Retirees and Soon-To-Be-Retirees may include free consultations, a free retirement income plan, risk analysis, and fee analysis. In addition, a comprehensive written retirement income plan may be provided to those who complete the entire process. Qualified Retirees and Soon-To-Be-Retirees must have a minimum of $500,000 of investible assets such as IRA’s, 401K’s from past employers, stocks, bonds, mutual funds, bank accounts, money markets, CD’s, etc., but DOES NOT include real estate, businesses, limited partnerships, 401K/retirement plans that can’t be moved to another plan, and other illiquid type assets.

Past performance is no indication of future performance and such information cannot be relied upon regarding future potential gains. Investing involves risk. There is always the potential of losing money when you invest in securities. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining market. Advisors and agents may only conduct business with residents of the states or jurisdictions in which they are properly registered or licensed and not all of the securities, products and services mentioned are available in every state or jurisdiction.

Nothing is directly or indirectly guaranteed by this information. The planning and ideas presented herein are not suitable for all individuals or situations. Hypothetical examples are used to explain concepts and are not indicative of potential results you could receive; past performance is not a guarantee of future results; and results are not indicative of any particular investment or income tax situation; your results will be different and could be lower or higher. Please consult legal or tax professionals for specific information regarding your individual situation. Peak Financial does not offer tax or legal advice. Consult your financial professional before making any investment decision.

Insurance product features and benefits, such as guaranteed lifetime income riders, are subject to contract terms, limitations, fees, and the claims paying ability of the insurance company issuing the contract. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of any other asset including an annuity may have tax consequences, early withdrawal penalties, or other costs and penalties as a result of the sale or liquidation. Different assets can be complex and carry fees, costs, and surrender charges. If you place assets under management with Fiduciary Solutions LLC, we are paid an advisory fee from Fiduciary Solutions LLC and if you purchase an annuity through us, we are paid commissions from an insurance company.

2019(1), 2020(2), 2021(3), 2022(4), 2023 (5) and 2024 (6) Five Star Professional Wealth Manager Award - Dan Ahmad and Jim Files have been nominated for and have won the 2019, 2020, 2021, 2022, 2023 and 2024 Five Star Wealth Manager Awards. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Once awarded, wealth managers may purchase additional profile ad space or promotional products. Award does not evaluate quality of services provided to clients. The Five Star award is not indicative of the wealth manager’s future performance. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. Award winners represent an exclusive group of wealth managers who have demonstrated excellence in their field by satisfying 10 objective selection criteria. For additional information on the Five Star award, including a complete list of the 10 objective selection criteria and their research/selection methodology, go to https://fivestarprofessional.com.

Investment advisory services are offered through Fiduciary Solutions, LLC, a California Registered Investment Advisor. Insurance products and services are offered through PFFG Insurance Agency LLC, a licensed insurance agency (CA Insurance License #0N14013). Peak Financial Freedom Group LLC is a financial planning and umbrella marketing organization, which enables the provision of multiple financial services under one brand. Peak Financial Freedom Group LLC, PFFG Insurance Agency LLC, and Fiduciary Solutions LLC are affiliated entities with common ownership and control. Jim Files is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1620449) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0F06511). Dan Ahmad is licensed as an investment adviser representative with Fiduciary Solutions LLC (CRD # 1491561) and is a licensed insurance producer with PFFG Insurance Agency LLC (CA Insurance License #0732913).

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