Retirement Planning
Background
Laws Financial partners with clients to build a plan with a goal of having sufficient assets to pay their bills and live the kind of life they’ve worked hard for upon retirement. Retirement planning involves analyzing current assets, discussing goals, and developing an investment plan that gives you a chance to live out your retirement in comfort.
Retirement Planning
Budgeting
Budgeting is a key retirement consideration. According to AARP, it is typically recommend that retirees need about 80% of their pre-retirement income. You’ll be spending less on contributions to retirement plans and payroll taxes as well as work-related expenses such as transportation and clothing.
Retirement can also present new expenses, though. You may have to pay for that cruise to Alaska you’ve always wanted or there may be health care and long term care expenses for which you must account. Laws Financial can help you firm up the numbers you need for a comfortable retirement.
Figuring out how much you need to save and choosing the appropriate vehicles to do so is the first step. Before establishing a brokerage account or other investment strategy, you should take full advantage of the tax-advantaged savings options legally available to you: IRAs and 401(k)s. Far too many people miss out on financial benefits available to them through these accounts.
“Someone's sitting in the shade today because someone planted a tree a long time ago”
Warren Buffett
Retirement Planning Strategy
IRAs are a great way to supplement the income generated from Social Security or any employer-sponsored retirement plan you may have. They are easy to establish and offer a great deal of flexibility with regard to the financial products in which you may invest.
There are different kinds of IRAs—traditional, Roth, SEP (Simplified Employee Pension), SIMPLE IRA, and Inherited—each with its own unique advantages. Laws Financial’s investment team will walk you through the ins and outs of each, and help you choose the account(s) that’s best suited to your income, retirement goals, and individual needs.
401(k)s and 403(b)s can be powerful savings tools for individuals, allowing employees to compound their retirement saving through employer matches and reap the benefits of tax deferment until retirement. The basic employee contribution limit for 2020 to a 401(k) is $19,500, with a catch-up allowance of $6,500 annually if you’re 50, or over.
The team of advisors at Laws Financial can help you take the steps you need as you approach retirement. If possible, it is a best practice to liquidate all debt before retirement, or at least have a good plan for servicing that debt. You’ll need to make decisions about how long to work and how to handle the increasing challenges of elder health care.
Medicare is a great benefit to most people, but it doesn’t cover everything. You’ll need to budget for long-term care options, and services like vision and dental care. If you plan to retire before age 65, you’ll need a plan to bridge the gap between your employer-provided health coverage and Medicare.
You’ll receive more Social Security benefits if you wait to start receiving it. Most people qualify to start receiving Social Security income at age 62, but your benefits will be greater if you wait until your full retirement age (FRA). Your FRA depends on when you were born. For people born after 1960, that age is 67. If you are in good health and expect a long retirement, it makes sense to wait until age 70 to start receiving your benefits due to credits available for delaying benefits past your FRA.
Your retirement strategy will change over time. Early in your work life, you’ll want to sock away as much as possible. The earlier you start saving, the more that money will compound over time, giving you more flexibility as you approach retirement. Your investment strategy will shift as you approach retirement, as well. We can help you modify your portfolio away from riskier investments as your target retirement age approaches.
There is inherent risk in investing. We can’t guarantee that all the investment choices you make will return profits as you prepare for retirement. We can guarantee, though, that Laws Financial will always have your long-term financial goals in mind and will work for your well-being.