March 5, 2021


When you first begin your career as a young adult, retirement seems far away and not tangible enough to worry about. You start contributing to accounts, but you may not think about it beyond that. Then later, no matter how much you’ve saved and how early you’ve started, the worry kicks in. Did I do enough? What if I haven’t saved enough? Retirement income planning turns from mindless money management into something considerably more important.

Start with Estimating What You’ll Need

If you don’t know where you’re going, how do you know if you are on the right path, and how will you know when you get there? The first step to retirement income planning is determining how much retirement income you will actually need when the time comes. If you’re still more than ten years away, a ballpark figure is usually enough of an estimate, but it should be one that you’ve put some thought into. Look at your current monthly budget and think about how it will change when you are ready for retirement. Will your home be paid off? Are you planning to downsize? Are you hoping to travel? It’s also important to build in a cushion for inflation, and to understand that although some expenses may decrease, others, such as medical, may increase during the retirement years. Although you may pay off your home by the time you are ready to retire, you will have taxes to consider, and those could be higher in ten years.

Consider the Sources for Retirement Income

In most cases, you’ll be drawing retirement income from more than one place. Consider all of your assets and accounts. You may have a pension from your employer, a 401K, an IRA, and Social Security. Look at what accounts are correlated to the market, and make sure you have a good balance. You also need to make sure you are aware of all the tax impacts of each account and source of retirement income. This can be confusing, and that’s where a financial consultant can help.

Since the inception of the 401(k) and other ‘type of plans’ it has become more and more apparent that these plans have inadvertently created much of the ‘money stress’ that we all feel during our working years. You may be tempted due to this ‘marketing’ noise to contribute more than just ‘up to the company match’. However this is likely the most logical way for you to create less financial stress during your working life AND end up with more money in retirement (this will require a strategy though but often creates an impact pretty early in the process).

Remember the 401(k) plan is just one aspect of retirement planning. And anything that you cannot gain access to when you need it could likely be something that is used as a small supplement rather than the ‘one size fits all’ option that usually doesn’t work out for most.

Even back in 1978 when the 401(k) plan was adopted, the strategy was to use it as a small supplement and have a strategy for creating the liquidity that you need and want throughout your working years in other accounts that do not necessarily look like a traditional ‘retirement account’. This will require you to work with a specialist who listens to you and helps ‘you’ create the strategy that will work for you and your family.

Talk to a Professional About Retirement Income Planning

Talking to a professional about retirement income planning is one of the smartest decisions you can make. A consultant can help you:

●  Research your retirement options and “define” your retirement plan.

●  Evaluate your current financial health.

●  Take an inventory of your assets and liquidity.

●  Find additional sources of potential retirement income and focus on ‘tax-free and liquid’.

●  Make a debt payoff plan.

●  Enhance your current retirement planning strategy by making sure you get to keep as much of your income as possible when you retire.

Ten years or more is plenty of time to look at your current situation and strategy and work to adjust if need be. A retirement planning strategist can help you prioritize your future financial goals, as well as make sure you are making the smartest decisions to reach them.

Many of our clients have a goal of retiring around 62 years old so they can enjoy as many healthy and active years as they can in retirement. Meeting this goal requires strategic planning, and the earlier you start doing that, the better. Determining your overall liquidity, leverage, and how you’ll get from age 62 to age 70 without starting your social security too soon. It’s smart and possible to be proactive and map out how you’ll convert your tax deferred monies to tax-free during those 8 years, and we can guide you through it.

Worrying about your retirement income planning isn’t a productive strategy as retirement moves from an abstract concept to a coming reality. Most people make more money (often significantly more money) later in their career than earlier in it. If you think about it, is it logical the way the ‘traditional retirement accounts steer you?’ If you follow ‘traditional methods of retirement planning’ just try out the math. How do you possibly create a large enough pot of money to allow you to live close to the lifestyle you became accustomed to in the last 10 years of your career with traditional methods, in retirement? More importantly with that large of an income in retirement looming tax increases, what strategy do you have in place to ‘keep enough of that income’ to give you the life you want and deserve?

There are many things you can do in the second half of your career to ensure that you are financially healthy and well prepared for retirement. We help people like you maximize their income now to achieve their financial goals for retirement. Contact Safe Money Partners today.

photo of Jeff Mohlman

By Jeff Mohlman

Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.