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Joe Lucey

Nathan Zeller Joins Secured Retirement

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Secured Retirement is pleased to announce the significant expansion of the portfolio management services offered to their clients.  Chief Investment Strategist Nathan Zeller, Chartered Financial Analyst® (CFA®) and Certified Financial Planner™ (CFP®), recently joined the firm and will oversee the Registered Investment Advisor department.

“I am extremely excited to leverage my expertise and proficiency managing institutional investments exclusively to clients, as well as contribute to the continued growth of the Secured Retirement brand.    SR’s commitment to ensuring each client achieves a tailored retirement plan including personalized investment strategies motivated me to join the team,” announced Nate. 

CEO, Joe Lucey, CFP® stated, “Nate brings over two decades of investment experience including the last 12 years managing trust portfolios at both Ameriprise and US Bancorp.  By adding an internally managed option to the strong externally managed portfolios that we have previously offered we have changed what it means to deliver peace of mind and fiduciary-based planning rarely seen in a firm our size. The caliber of investment management we now offer launches our service to the next level.”

Nathan Zeller’s areas of expertise include portfolio management, asset allocation, security analysis, manager selection, and due diligence.  His investment philosophy is based upon fundamental research to identify overlooked areas of the market and find growing companies selling at a reasonable price.  He also incorporates long-term trends and themes into the investment process.

As the Chief Investment Strategist, Nate focuses his attention on providing sound fiduciary investment management. He leverages his analytical background and extensive experience to construct portfolios tailored to each client’s unique needs.  Nate dedicates himself to ensuring clients achieve their retirement goals and possess peace of mind knowing their assets are properly managed. Nate graduated from the University of Wyoming with a Bachelor’s degree in Electrical Engineering and a Master’s of Business Administration (MBA).  When not studying the markets or digging into companies’ financial statements, he enjoys spending time with his wife, two daughters, and pets.

Sequence of Returns Risk

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What will be your biggest risk when you retire? It’s probably not what you think it is.

Most people think it’ll be the skyrocketing cost of health care, higher taxes, or social security going bust.

But it’s not any one of these issues!

The biggest threat facing you in retirement is “sequence of returns” risk, and it could have a devastating impact on your nest egg.

According to CNBC “It could cause you to end up with two-thirds less money for the rest of your life.”

So, what exactly is “sequence of returns” risk?

It’s the risk of retiring during a downturn in the stock market.

If the stock market is falling during the first few years of your retirement, the combination of stock market losses and the need to withdraw money to pay for retirement could literally decimate your nest egg.

Because the stock market has been on a tear for the past 10+ years, the chances of a stock market correction, or bear market are growing by the day.

Imagine that when you retired, you’re forced to sell your investments in your IRA, 401K or other tax-deferred accounts during a downturn in the stock market – whether you want to or not.

This is exactly what could happen due to Required Minimum Distributions.

The government forces you to sell your investments inside your tax-deferred accounts whether the stock market is up or down. Once you sell these investments, you’ve locked in your losses, and you’ll never get this money back.

The only way you could avoid this is by having a strategy for RMD’s. The sooner you create that strategy, the more money you could potentially save.

Nest egg considerations:

Kiplinger (Click Here) has a great point about withdrawing money in retirement –

Let’s get real about “decumulation”—the process of spending down your nest egg in retirement. While it’s tempting to rely on simple rules of thumb and “safe” spending rates, they don’t address all of the unknowns: How long will you live? What unexpected expenses will you face? How will market performance, inflation and tax rates change in the future? Getting retirement spending right is actually “like trying to hit a moving target in the wind.”

Because of sequence risk, it’s not an effective way to plan for retirement by plugging a simple rate of return into an online retirement planning tool, which assumes you earn that same return each year.

A portfolio doesn’t work that way. You can invest the exact same way, and during one 20-year period, you might earn 10% plus returns, and in a different 20-year time period, you’d earn 4% returns. Average returns don’t work either. Half the time, returns will be below average.

Do you want a retirement plan that only works half the time?

Problems with the 4% rule

  1. Forbes, “The 4% Retirement-Asset Spend-Down Rule Is Rubbish.” But many retirees count on the 4% rule for their withdrawal strategy. According to article … “The 4% retirement rule says you should withdraw and spend an amount equal to 4% of the retirement account balances you held when you first retired”(Click Here). 
  2. Sequence of returns risk poses a major threat to this rule. You need flexibility when how much you withdraw. If the stock market plunges, the last thing you want to do is withdraw more than you need.
  3. Motley Fool, the 4% rule “doesn’t account for changing market conditions. In a recession, it’s probably not wise to step up your withdrawal amounts; you may even want to reduce them slightly. But when the markets are doing well, you might be able to withdraw more than 4% comfortably.”
  4. Kiplinger: Is 4% Withdrawal Rate Still a Good Retirement Rule of Thumb?

Watch out for RMDs

You could be forced to sell your investments and withdraw money from your retirement accounts whether you want to or not, and you’ll never get this money back again. This forces you to lock in losses, whether you like it or not.

They kick in when you turn 70 ½. And if you fail to take them, or if you make a mistake, you could face a stiff 50% penalty on the money you were supposed to withdrawal. That could leave you in a dire financial situation.C

CTA/ REBALANCE

When’s the last time you updated or rebalanced your investments? For many people, it’s been years. This is how you could get yourself into real trouble, especially with how fragile the markets are now.

The single, most important thing you could do for yourself is update and rebalance your investments, including the investments in your IRA, 401K and other retirement accounts.

This is a lot more complicated than a simple mix of stocks, bonds, and mutual funds.

We can show you the strategies that could properly diversify your portfolio that could keep your money working for you while reducing your risk.

The problem with sequence of returns risk is you have no control. You have no control over the ups and downs of the stock market.  You have no control over government rules that force you to withdraw money from your IRA or 401K.

However, you DO have control over one thing. You have control of converting your traditional IRA or 401K to a ROTH, which could help you sidestep sequence of returns risk.

Consider a Roth conversion

Depending on your situation, if might be beneficial to convert your 401K or Traditional IRA to a ROTH, or simply to save a portion of your retirement savings in a ROTH. A traditional IRA allows tax-free contributions, but when you withdraw that money, you must pay taxes. When you turn 70 ½ you are forced to withdraw this money (RMDs). 

A ROTH doesn’t allow tax-free contributions, but you pay zero tax when you withdraw money in retirement, and you don’t have to deal with RMDs. That means tax-free growth.

A Roth could give you the flexibility you need when dealing with sequence of returns risk. You gain complete control over your withdrawals.

The trick with a Roth IRA is you need to have a Roth IRA for at least five years before you can take money out of it tax-free.

Have diversified streams of income (including social security, annuities, laddered bonds)

According to The Balance, the best thing you can do to protect yourself from sequence of returns risk …

“Is understand that all choices involve a trade-off between risk and return. Develop a retirement income plan, follow a time-tested disciplined approach, and plan on some flexibility.”

The 3 most important words in retirement are income, income and income.  Income will be the lifeblood of your retirement. Show me someone who lives in constant fear of running out of money in retirement, and I’ll show you someone who doesn’t have a plan to generate income.

It’s not about simply having a plan to generate income. You need a diversified income plan if you want to protect yourself from sequence of returns risk. It’s too risky to rely on just one source of income in retirement.

Income diversification isn’t a one-time thing. You should be constantly updating of your plan.  Things change quickly in today’s world, so if you aren’t updating your plan, you’re setting yourself up for a major fall.

The following are some potential sources of income to help protect you from sequence of returns risk.

Here’s a great resource fromForbes: 4 Approaches to Managing Sequence of Returns in Retirement

There are 4 general techniques for managing sequence risk in retirement:

  1. Spend Conservatively
  2. Maintain Spending Flexibility
  3. Reduce Volatility (when it matters most)
    • Build an income bond ladder
    • Build a lifetime spending floor with an annuity
    • Rising equity glide path
    • Use funded ratio to manage asset allocation
    • Use financial derivatives to cut downside risk
  4. Buffer Assets—Avoid Selling at Losses
    • Cash reserve to fund near-term expenses
    • Cash value of life insurance
    • Line of credit/Home equity

Here’s another fromForbes: 6 Ways to Generate Lifetime Income in Retirement

Immediate Annuity

An immediate annuity mimics the behavior of a pension by providing a fixed amount of income every month for the life of the retiree. It is the simplest and most-direct approach to converting a retirement nest egg into a steady income stream to meet monthly expenses.

Laddered Bonds

Unlike an immediate annuity, a laddered bond enables you to convert your savings into cash if needed. Investing in bonds of staggered maturities (“laddering” them) provides a stable stream of income through regular payments of principal and interest from the bonds while maintaining access to your savings.  

Target Date Fund with Systematic Spending

Increasingly popular Target Date Funds (TDFs) adjust the mix of stocks, bonds, and cash over time from more-risky to less-risky as you approach your retirement date. A TDF with a systematic withdrawal plan provides an income stream while keeping assets liquid and invested, and creates the potential to generate higher returns.

Managed Payout Fund

For the benefits of a simple TDF with less risk, retirees could consider managed payout funds. This option invests in both stocks and bonds while reducing the downside potential by providing monthly withdrawals equal to a fixed percentage of the account balance.

And another Forbes: 8 Sources of Retirement Income in a Low-Yield World

Dividend stocks

Most mature companies pay a recurring dividend to shareholders. In the majority of cases, these dividends are paid quarterly to shareholders who owned the stock on the date of record. Typical yields for most dividend focused ETFs are 2-3%.

Investment grade corporate bond fund

Has bond holdings from highly-rated companies in a proportion that is meant to mimic the indices they track.

Municipal bonds

Debt obligations issued by states or other municipalities to fund projects. Some, but not all, municipal bonds are exempt from federal tax for all investors and exempt from state tax if the investor lives in the state of the municipality issuing the bond.

REIT

Real estate investment trusts own a portfolio of real estate, the purchase of which is financed by debt and the issuance of securities to investors. A REIT can be public or private and open-end or closed-end.

Reverse mortgages

The bank pays you, you keep your home, and it remains part of your estate. Essentially, you are putting your home equity to work for you.

Commercial/residential/multi-unit real estate

Buying a rental property is a rather straightforward proposition, especially if you know the local market well that you’re investing in.

Annuities

Insurance products that pay out over your lifetime, no matter how long you live. And these products have come a long way over the last few decades.

If you want to go into depth about using DIVIDEND STOCKS to protect against sequence of returns risk, click HERE.

And don’t forget about SOCIAL SECURITY

Social security is one your most important sources of income. You can’t outlive it, and it’s protected from market fluctuations, and inflation (COLA).

Even if you’ve earned a modest income throughout your career, your Social Security benefits could add up to 6-figures in retirement. If you’ve earned an average income, it could be worth a few hundred thousand dollars. And if you’ve earned an above-average income, your benefits could be several hundred thousand dollars in retirement. This is enough money to get Warren Buffet’s attention.

Most Americans take their social security benefits at face value. And they wind up leaving tens of thousands, if not hundreds of thousands of dollars on the table. According to new research featured in Bloomberg … 96% of HARD–WORKING Americans lose an average of $111,000 in social security benefits. And it’s all due to critical timing mistakes.

Everyone’s situation is unique. The only way to get the most out of your benefits is with a customized Social Security analysis.

So what?

Successful retirements are not built on how much money you’ve saved for retirement.

They’re not built on how many assets you have either. They’re built on your ability to generate INCOME in retirement.

If you don’t have a carefully thought out plan to generate income from different sources, it’s the fastest way you could run through your entire life savings far too soon.

5 Critical Factors That Could Significantly Impact Your Social Security Income

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Planning for retirement is hard enough, but did you know there are factors hiding in plain sight that could change your income in retirement?

It’s unfortunately true.

According to a recent article in FORBES “The average working couple will receive over $1 MILLION in social security benefits over their lifetime – And the right claiming strategy could increase your benefits by as much as $200,000!”

Most Americans only consider when they will claim social security.

But they ignore other critical factors that could have a far greater impact.

In this post we’ll reveal 5 critical factors that could dramatically increase your social security income, including

  • How you could avoid the most common mistake of when to claim social security.
  • An expiring loophole that could help you get 32% more in social security income.
  • Plus, how you could reduce, or eliminate paying taxes on up to 85% of your benefits

Factor #1: Your timing of when you claim your benefits

We’ve used this research study a lot lately, but it’s powerful none-the-less, and would be a great way to open this segment …

According to new research featured in Bloomberg and Forbes … 96% of HARD–WORKING Americans lose an average of $111,000 in social security benefits. And it’s all due to critical timing mistakes.

When you claim social security, there’s a lot more at stake than just your benefits. This decision could not only impact how much you receive, but it could also trigger an avalanche of taxes; double your Medicare premiums; and cause you to wipe out your spousal benefits. So, the income you thought you could depend on for retirement, is now much less. Ultimately, it could cost you tens of thousands, if not hundreds of thousands of dollars.

9 in 10 Americans don’t know how to maximize their Social Security benefits, according to a new article from The Motley Fool (Click Here). A survey conducted by Nationwide found a full 92% of Americans couldn’t identify the factors that would give them the maximum benefit — even though 53% claimed they knew exactly what to do in order to get the most income.

Claiming your benefits is more complicated and confusing than ever before.  “There are 2,728 rules in their handbook. And there’s literally hundreds of thousands of rules about those 2,728 rules in what’s called their program operating manual system.”

Conventional wisdom for when you should claim your Social Security benefits says you should wait until age 70. And that makes sense, the longer you wait to claim your benefits, the more money you get, right? But unfortunately, that could be flat out wrong. And that’s because conventional wisdom has been turned upside down. Why you may think waiting to claim your benefits could add thousands to your bottom line it could actually cost you money. Because you haven’t looked at how it impacts the rest of your retirement game plan. It all depends on your unique situation.

Your strategy for claiming your Social Security benefits will be different than your spouse, or you brother, or neighbor, and so on. Everyone is different. And everyone needs a strategy designed specifically for their situation.

There is no one size fits all strategy. This kind of thinking can get you into big financial trouble.

The truth is, most Americans take their social security benefits at face value. And they wind up leaving tens of thousands, if not hundreds of thousands of dollars on the table. It’s critical you understand all of your options before making your decision. There are benefits you may not know exist. So you need to arm yourself with the facts.

Factor #2: Social security taxes

Because of the way Social Security benefits are taxed, many middle-income retirees face a ‘tax torpedo,’ where their marginal tax rate can more than double.

It could hit you like a ton of bricks … when you retire, you could pay taxes on as much as 85% of your Social Security benefits. Let me repeat that you could pay taxes on as much as 85% of your Social Security benefits.

Most people don’t realize this, and when the tax bill hits it’s too late to do anything about it. So now the money you were counting on to help support you in retirement, could be a fraction of what you thought it was going to be. And there’s nothing you could do about it.

Your benefits could also throw you into a higher tax bracket, increasing your taxable income. This could be an unexpected expense you want to avoid at all cost.

According to US News, there are a few ways you can minimize Social Security Taxes: Stay below the taxable thresholds, manage your other retirement income sources, consider taking IRA withdrawals before signing up for Social Security, save in a Roth IRA, factor in state taxes, and set up Social Security tax withholding.

Using a Roth Conversion is one of the easiest ways to manage your Social Security taxes. A Roth requires after-tax money, and then allows for tax-free growth. So when you withdraw this money in retirement, you will not get taxed. Withdrawing money from a traditional IRA or 401K will raise your taxable income, and therefor raise taxes on your Social Security benefits. A word of caution: you probably won’t want to convert all your money to a Roth at one time – that could result in a massive tax bill. Most people who use this strategy convert just a portion of their savings each year.

Factor #3: How your social security income impacts your Medicare premiums.

Most people have no idea that their social security benefits could send their Medicare premiums through the roof! Especially if you’re what the Social Security considers a “high-income beneficiary.”

According to AARP, “Medicare premiums are based on your modified adjusted gross income, or MAGI. That’s your total adjusted gross income plus tax-exempt interest, as gleaned from the most recent tax data Social Security has from the IRS. To set your Medicare cost for 2019, Social Security likely relied on the tax return you filed in 2018 that details your 2017 earnings. If your MAGI for 2017 was below the “higher-income” threshold — $85,000 for an individual taxpayer, $170,000 for a married couple filing jointly — you pay the “standard” Medicare Part B rate for 2019, which is $135.50 a month. At higher incomes, premiums rise, to a maximum of $460.50 a month if your MAGI exceeds $500,000 for an individual, $750,000 for a couple.”

The rules and guidelines for Medicare change every year, so it’s critical you stay up to date.

Factor #4: Your spousal benefits

The details of spousal benefits are NOT well-understood by many Americans.

You aren’t the only person to think about when you make your claiming decision. This is more than just about you. This impacts your spouse too. If you make a mistake, your decision could wipe out your spouse’s spousal benefits. And there’s no getting this money back. Once it’s gone it’s gone.

Your spousal benefits could add tens of thousands of dollars to your benefit. But it’s riddled with trap doors, so you have to know the rules.

What is a spousal benefit? When a spouse dies, their current or former marital partner could get their benefits. It depends on the specific situation though. Who is eligible? Current spouses, widowed spouses, and ex-spouses.

Here are some exact rules to keep in mind from The Balance:

“Current spouses and ex-spouses (if you were married for over 10 years and did not remarry prior to age 60) are both eligible for a spousal benefit”.

“You must be age 62 to file for or receive a spousal benefit. You are not eligible to receive a spousal benefit until your spouse files for their own benefit first.

 Different rules apply for ex-spouses. You can receive a spousal benefit based on an ex-spouse’s record even if your ex has not yet filed for his or her own benefits, but your ex must be age 62 or older.”

“As a spouse, you can claim a Social Security benefit based on your own earnings record, or you can collect a spousal benefit that is half the amount of your spouse’s benefit at their full retirement age. “

Many retired couples get this wrong. And it winds up costing them thousands of dollars in benefits. But you can easily avoid this. And you owe it to your spouse to get this right.

Many retired couples get this wrong. And it winds up costing them thousands of dollars in benefits. But you can easily avoid this. And you owe it to your spouse to get this right.

It all starts with a customized strategy. There’s no one-size fits all solution here. Every couple has a unique situation and will have a unique strategy to get back every last penny that’s rightfully theirs.

According to The Motley Fool, here are 5 Things to Know About Social Security Spousal Benefits: You can receive up to half of your spouse’s benefit, you can claim spousal benefits even if you worked yourself, you can’t claim spousal benefits until your spouse starts collecting Social Security, you can’t grow a spousal benefit, and you can claim spousal benefits even if you’re no longer married.

Factor #5: Yearly changes/Restricted Application is Expiring

Every day, 10,000 or so baby boomers are turning 65.  For many of you, Social Security will be a major part of your retirement income.  With that in mind, it is important to know how Social Security will be changing for 2020.

There are more changes for social security starting in the New Year. And although some of these changes may seem insignificant on the surface, they could have a huge impact on your benefits.

Planning for retirement can be tricky. There seems to be new traps to look out for every step of the way.

If you’re feeling overwhelmed or a little afraid, we are more than happy to assist you. Please feel free to reach out to us here at Secured Retirement Financial at any time.

Could you retire sooner than you think?

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Forbes: 7 Simple Strategies to Retire Early Click Here

“I’m never going to be able to retire.” Have you ever mumbled this to yourself? If you have, you’re not alone. Over 1/3 of all Americans don’t believe they’ll have enough money to live off of in retirement.  Ouch. With all the pessimistic view on retirement, then how in the blue blazes are there outliers that are able to buck the trend and retire in their 30’s? While they may be on the extreme side of retiring early there’s a lot to be learned from them.

So yes, even if you are one of pessimistic souls that believes that you can’t retire early, here are 7 simple early retirement strategies you can implement today:

1.      Know Your “Numbers”

2.      Lower Your Basic Cost of Living

3.      Stay Out of Debt

4.      Don’t Buy a House That Will Own You

5.      Save More Than You Thought You Ever Could

6.      You May Need to Increase Your Income

7.      Make “Balance” Your Investment Guiding Principle

US News: 8 Reasons to Pursue Early Retirement Click Here

Most people retire during their 60s. To retire earlier than that requires planning, discipline and paying close attention to your savings and investments. But the sacrifices and extra effort are worth the trouble. Early retirement planning makes you rethink what brings you happiness and life satisfaction outside of your career and improves your financial footing.

Here are eight reasons to pursue early retirement:

  1. Address the future today (set your retirement goal)
  2. Increase your income
  3. Circumstances may require you to retire early
  4. Improve your relationships
  5. Travel
  6. Prioritize your health
  7. Lower consumption and spending
  8. Failure isn’t a bad outcome – at least you’ll set your goal

WSJ: Let’s See How Ready for Retirement You Really Are Click Here

I have no idea when, or if, markets will settle down. What I do know is that it’s easy to get caught up in issues that are out of our hands: the markets, interest rates, changes in government programs, etc. At their worst, such anxieties can leave people paralyzed. Put another way, you could end up delaying—and delaying—your retirement for a very long time.

So…instead, focus on the parts of your retirement preparations where you have control. 

Pop quiz: If you are, in fact, retiring in 2019, how many of the following steps—for which you’re the boss—have you taken?

  1. Setting a budget
  2. Reducing debt
  3. Timing Social Security
  4. Creating a pension
  5. Managing taxes

Dave Ramsey: How to Retire Early Click Here

How do I retire early?

That’s a question I hear a lot when I’m on the road. Maybe you’re concerned about health issues. Perhaps you want to chase that dream of owning your own business. Or maybe you feel led to do volunteer work. Whatever the reason, the question is the same: What would it take for me to retire at 60? Or even 55 or 50? 

The answer depends on your financial situation, but if you’re serious about learning how to retire early, there are some things you need to do:

  1. Determine what kind of lifestyle you want in retirement.
  2. Create a mock retirement budget.
  3. Evaluate your current financial situation.
  4. Get serious about lifestyle changes.
  5. Pour everything into investing.
  6. Meet regularly with a financial advisor.
  7. Play it smart when you retire early.

The Motley Fool: Want to Retire Early? Handle These 3 Hurdles First Click Here

For many workers, the idea of retiring early is a dream they’ve pursued throughout their careers. Being able to have more time to do the things you want is a goal that nearly everyone has.

However, in order to make early retirement work, it’s important to understand the potential difficulties involved and to address them while there’s still time. In particular, if you want to retire early without ending up in a difficult situation, you’ll want to make sure that you have three key issues dealt with before making a decision you might regret later.

1.      Figure out where your money will come from

2.      Decide how you’ll bridge the healthcare gap

3.      Come up with a strategy for staying active socially

Kiplinger: Worried You’re Never Going to Be Able to Retire? Click Here

Some people spend more time thinking about retirement than others, but most everyone has at least a few ideas about what their life will be like when they don’t have to work anymore. 

Unfortunately for many, hoping and dreaming is about as far as they get in the planning process. They don’t know whether they can really achieve their goals because they haven’t taken the steps necessary to prepare for them.

If that sounds like you, and you’re anywhere close to the age you think you’d like to be when you retire, let me warn you: Your retirement reality could be far different from the lifestyle you’ve imagined. And if it is, it likely will be because you ignored one or more of these five basic threats:

Threat No. 1: Unclear plans.

Threat No. 2: Medical costs.

Threat No. 3: Investing too conservatively.

Threat No. 4: Not knowing how much risk is in your portfolio.

Threat No. 5: Inflation.

Why You’re Not Prepared for Retirement: Research

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Forbes: Why You Might Not Be as Prepared for Retirement as You Think Click Here

Are you worried about retirement? If so, you’re not alone. According to our research, only 22% of employees reported being on track last year and the actual state of retirement preparedness may even be worse. That’s because many people use retirement calculators to estimate whether they’re on track, but even the best calculator is subject to the universal rule of computer programs – garbage in, garbage out.

Here are some of the most common mistakes I see people make when it comes to calculating whether they’re on track …

  1. Not personalizing retirement spending needs
  2. Trusting your Social Security statement
  3. Counting on a pension that might not be there
  4. Relying on working in retirement
  5. Assuming an average life expectancy
  6. Planning to retire at 65.
  7. Overestimating investment returns
  8. Confusing investment returns with income

The Motley Fool: 3 Signs You’re Not Ready for Retirement Click Here

You may be mentally and emotionally ready to retire, but if you’re not financially ready, your retirement may not be the relaxing time you’d hoped for. Being truly ready to retire means having a thorough grasp of how much money you need and the savings to back it up. Here are three signs that you’re not quite there yet.

1.      You don’t have a retirement plan

2.      You have a lot of debt

3.      You don’t know when you should take Social Security

Medium: Why 78% of Americans Are Not Prepared for Retirement Click Here

Many Americans have very little saved for the retirement. The 2018 Planning & Progress Study gathered data in an online survey from over 2000 Americans over the age of 18. In that survey, 78 percent of respondents said they were “extremely” or “somewhat” concerned about affording a comfortable retirement and nearly 66 percent said there was some likelihood of outliving retirement savings.

Additionally, the report found that, * 21 percent of Americans have no retirement savings at all, * 33 percent of baby boomers have between $0 and $25,000 of retirement savings, * 75 percent of Americans reported a lack of confidence in receiving Social Security benefits, and * 46 percent admitted to taking no steps to prepare for the likelihood they could outlive their retirement.

There are a number of reasons that Americans are not prioritizing retirement planning. From not having finances organized to daily budgetary constraints, there is always a reason to put off retirement planning. A recent phenomenon known as “The Sandwich Generation”, where adults age 40 through 50 are caring for children and aging parents, has caused an immense financial strain. In fact, 15 percent of people between the ages of 40 and 50 are financially supporting aging parents and their children, making retirement planning extremely difficult.

However, retirement planning is essential for a financially secure future and not being financially prepared can have dire consequences. Aside from being living comfortably in retirement, not planning for retirement puts a strain on government resources.

The Balance: Tips to Prepare for Retirement Success Click Here

The retirement planning process takes time and effort. At times it may seem like an overwhelming task. But what you do today can help you achieve your retirement goals and allow you to maintain the lifestyle you want in your later years.

Here are some tips to make reaching those retirement goals feel a little more manageable.

Tip 1: Focus on the things you can do and decide to take action today

  • Create a plan and put it in writing
  • Implement your plan
  • Track your progress

Tip 2: Protect yourself and your loved ones

  • Your life
  • Your health
  • Your assets

Tip 3: Take a look at all of your retirement saving options

  • Employer-sponsored retirement plans (401k, 403b, etc).
  • Check out IRAs
  • Consider HSAs.


Tip 4: Focus on your overall financial well-being

  • Increase your knowledge
  • Increase your income
  • Find ways to reduce your spending
  • Refinance and consolidate debts
  • Eliminate extra fees and charges.
  • Search for ways to reduce your taxes

MarketWatch: The 7 Elements of a Successful Retirement Click Here

  1. Start with well-defined goals, and revisit them at least annually.
  2. Many people get great satisfaction from work
  3. Another aspect of retirement is lifetime learning
  4. Budgeting is more than setting a top-line spending number based on a pre-arranged percentage
  5. Let’s consider income
  6. Take the time to go through your employment history and discover what benefits you may have forgotten
  7. Invest for your whole life

Kiplinger: If You Want to Retire Comfortably, It Isn’t all About Investing Click Here

A lot of people — maybe even most people — can be successful DIYers through the early years of their investing life. Unless you’re a high earner, have a high net worth or have some other special planning needs, you probably can figure out how much you want to contribute and how to allocate your assets. (If you can’t or don’t want to, you should, by all means, seek professional guidance — even if it’s only on specific occasions, or to tap into some good investing advice.) 

However, I’m going to warn you: When you’re ready to wrap up the accumulation phase and move on to preservation and distribution, things could get a little trickier. OK, a lot trickier. Using a DIY approach may not be the best choice as the focus shifts from making and saving as much money as you can to living off that money for decades in retirement. 

You need a comprehensive financial plan that includes …

  1. A solid income plan
  2. An investment plan
  3. A tax-efficient plan
  4. A healthcare plan
  5. A legacy plan

Don’t let these 4 tax traps ruin your retirement

by

Most people are focused on their investment returns, but they’re ignoring the one thing that could have an even bigger impact on their nest egg.


Taxes.

Taxes will likely be your biggest expense in retirement. Below are 4 retirement tax traps you should get in front of before you start planning that retirement party.

Retirement Tax Trap #1: Claiming Social Security could trigger higher taxes.

Claiming your Social Security benefits could be one of the most important financial decisions of your life. How and when you claim Social Security could impact far more than just the amount of your benefits check. It could also trigger paying taxes on as much as 85% of your benefits.

Don’t make your decision solely based on maximizing your benefits. Instead, consider how it could impact your taxes, Medicare premiums and spousal benefits.

Retirement Tax Trap #2: Taxes on your IRA, 401K (and other retirement accounts)

Contributing money to your IRA and 401K is easy. But withdrawing this money in retirement is complicated and confusing.

Remember, you must pay taxes when you withdraw this money in retirement. And Required Minimum Distributions will further complicate matters. When you turn 70 ½, “RMD’s” force you to start withdrawing money from these accounts, whether you want to or not. And this could result in paying more and more taxes every year

The key is to create a strategy for RMD’s in your late 50’s or early 60’s.

Retirement Tax Trap #3: Not having tax diversification

According to Kiplinger Magazine, “For the average individual, diversification has always focused on equities, and equities alone. And that’s a problem.”

Your money should be invested in different categories to diversify your tax risk.

Most financial accounts fall into 3 categories: taxed always, taxed later and taxed rarely. If you have too many eggs in one basket, it could spell serious financial trouble in retirement.

Retirement Tax Trap #4: Not switching to a ROTH IRA or 401K

An IRA or 401K allow tax-free contributions. But you must pay taxes when you withdraw this money in retirement unless you convert some, or all your traditional IRA or 401K to a ROTH.

A ROTH IRA or 401K doesn’t allow tax-free contributions (that’s the catch), but you pay zero taxes when you withdraw money in retirement. ROTH accounts are not subject to RMDs either. That means you get tax-free growth, which could add up to tens of thousands of dollars in retirement (possibly more).

Meet with a qualified financial advisor to see if you should convert your IRA or 401 to a ROTH.

Summary

The good news is you have more control over how much you pay in taxes in retirement, than any other time of your life. But this doesn’t automatically happen. It requires a forward-looking tax plan.

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Book Your Free TaxSmart™ Financial Review Today.

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Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!