Today’s economic situation makes it difficult for many to retire.
Inflation, market volatility, rising healthcare costs and uncertainty surrounding interest rates are taking a blow to Americans. 70% say financial stress is the highest ever.
The stress is what encourages people to rethink their traditional financial strategies that have been going on for decades. Old Wisdom taught investment strategies such as the 60/40 portfolio. This is a “set-it-and-forget” approach that allocates 60% of the investment to stocks and 40% to bonds, and relies purely on the S&P 500 index.
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These models are outdated and built in another era, and today’s retirees need more than just market exposure. You need the flexibility, protection and purpose behind your investment.
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Our investment goals are constantly changing, so that markets don’t always move linearly. As people live longer, healthcare costs will rise and more families will support older parents and children, so that they cannot build financial plans focused solely on growth.
That’s where plans come in, not speculation.
I have seen firsthand how people feel more confident and uneasy when financial life is split into clear and strategic roles.
So we designed a process called The Tailor-Made Wealth Plan, a four-part framework that helps you organize wealth in a way that reflects not just the theoretical average, but actual risks and goals.
Four financial roles that all retirement plans should cover
Liquidity. All plans must start with accessible cash at the Emergency Fund, which covers 3-6 months of mandatory expenses. It is difficult to predict when a disaster can attack with a medical emergency, expensive home repairs, or large stock market corrections.
The fund gives them the freedom to protect retirees from poor decisions during the recession and survive volatility.
income. Once emergency funds are built, the next priority is to ensure a guaranteed flow of income that covers everyday life.
For many, this means incorporating strategies such as fixed index pensions that grow based on stock index performance, such as the S&P 500, but principals are protected from market volatility.
Fixed indexed pensions include income riders who guarantee predictable income payments from retirement at annual fees.
growth. Growth remains important, but there is a tactical lens. They manage clients’ investment accounts using active models and strategies that track key economic indicators each month.
In response to these signals, we will shift the portfolio between growth-focused exchange sales financing (ETF) and defensive positions. It is important to adjust your investments based on your economic strength to leverage growth without being exposed to risk.
Long-term care protection. As retirees live longer, many people become poor in health and accumulate large medical expenses. Unfortunately, this is one of the most overlooked risks of retirement, allowing you to emit your portfolio if you can’t prepare.
People use hybrid long-term care strategies or asset-based long-term care pensions to add this risk to self-insurance, ensuring that care does not come at the expense of their legacy.
Don’t forget to plan your taxes
You also need to consider taxes within each financial plan. Even the best-designed retirement plans can fall apart if taxes are ignored.
Normal income from an IRA withdrawal can push you into higher parentheses, the required minimum distribution (RMD) inflates taxable income, and the additional charges of Medicare Income-related monthly adjustments (IRMAA) can increase premiums if income is not carefully managed.
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That’s why tax strategies cannot be retroactive in your financial plan. You should work with financial planners to strategically withdraw from your retirement account, effectively implement loss conversions, minimize IRMAA penalties, and adjust the plan to your CPA and real estate attorney.
Your retirement assets should be as organized and intentional as your year of employment. In today’s market, the real plan is not to chase returns, but to match your wealth with your lifestyle, values ​​and real-world uncertainties.
Don’t rely on a versatile portfolio. Retirement plans are more than just expecting the best. You need to prepare for future economic challenges.
The commentary in this article reflects the personal opinions, perspectives and analysis of author Matt Eilers and should not be considered as a description of the advisory services provided by Foundations Investment Advisors, LLC (“Foundations”) or as a performance return for Foundation Clients. The views reflected in the commentary are subject to change at any time without notice. References to specific security and related performance data are not recommendations for buying or selling that security. The foundation uses a variety of investment technologies and strategies to manage client accounts, but this is not necessarily discussed in the commentary. The Foundation considers statistical data or information obtained or prepared from third party sources contained in the commentary to be reliable, but does not guarantee its accuracy or completeness.
Loss conversion may not be suitable for your situation. The main goal of converting retirement assets into a Roth IRA is to reduce future tax liability for distributions taken in retirement or beneficiary distributions. The information provided will help you determine whether the Ross IRA conversion is suitable for your particular situation. Check your retirement savings, taxes, and legacy planning strategies to ensure that your Roth IRA conversion fits your planning strategy.
Comments on safe and secure investments and guaranteed income flows refer to fixed insurance products only. They never mention investment advisory products. The fees and guarantees provided by insurance products and pensions are subject to the financial strength of the issuing insurance company. Not guaranteed by a bank or FDIC.
This is not approved by the US government or is not related to the federal Medicare program. If applicable, we do not offer all plans available in your area. The information we provide is limited to plans that we provide in your area. To get information about all options, contact Medicare.gov or 1-800-Medicare.
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This article presents and presents the opinions of contributors, not Kiplinger’s editorial staff. Advisor records can be viewed in SEC or FINRA.
