FAQs

12 key questions every retiree must answer

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Do you know how long your money will lastif you stop working today, invest your nest egg as safely as possible and try to maintain your current standard of living?
Do you know how long your money will last if you stop working today, invest your nest egg as safely as possible and try to maintain your current standard of living? One of the greatest fears of retirees today is running out of money before they run out of life. This is an important question to answer and lies at the heart of Retirement Income Planning. These answers are even more critical given the difficulties in the financial markets and larger economy that have significantly impacted retirement savings over the last decade. While it would be nice to have a one-size-fits-all formula when it comes to how long your money will last, the truth is there are many factors that go into that equation.
Planning and preparing for a financially comfortable retirement is tough enough these days; living in retirement can be even tougher. The point of all the calculations we do in our no cost, no obligation Retirement Income Analysis is to make sure your income will last a lifetime.
Do you know which one of the 567 ways to claim your Social Security will maximize the lifetime benefits?
The Social Security Administration provides you with 567 ways to claim your benefits. The Social Security handbook has 2,728 separate rules governing your benefits, yet they provide ZERO employees to advise you on the best strategy. Choosing the right benefits at the right time could mean tens of thousands of additional dollars in retirement. Making a mistake COULD cost you up to 72% of your benefits. And it’s absolutely critical that you get it right because soon after you claim, your benefits become permanent. There are no “do-overs” [after 12 months]. Social Security is enormously complex. For a couple, age 62, there are over 100 million combinations of months for each of the two spouses to take benefits.
In our no cost, no obligation, Retirement Income Analysis, you’ll know which of the 567 ways to claim benefits will maximize your lifetime benefits during retirement. It’s your Social Security, but what you don’t know CAN hurt you.
Do you know the proper mix of investments in a retirement income portfolio?
Asset allocation is an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor’s risk tolerance, goals and investment time frame. Asset allocation is based on the principle that different assets perform differently in different market and economic conditions. One of the cornerstones of financial planning for retirement is that an individual’s exposure to higher-risk assets like equities should decline as his or her retirement date nears. Since risk level and portfolio return are directly related, your asset allocation should balance your need to take risk with your ability to withstand the ups and downs of the market.
What’s the best asset allocation for my age? It depends on your age, your goals and objectives and your appetite for risk. In our no cost, no obligation Retirement Income Analysis, we evaluate all pertinent factors and help you arrive at the optimum asset allocation for your situation.
Do you know how big of a nest egg you’ll need as you enter retirement if you’ll be retired for 20, 30 or even 40 years?
Have you ever considered how big of a nest egg you’ll need to retire comfortably if your retirement could last 20, 30 or even 40 years? The range of answers is all across the board. The low end suggests you’ll need to have saved 8 times your pre-retirement pay in order to maintain your current lifestyle during retirement, with the high end more like 20 times your annual salary. Estimating what your retirement expenses will be can give you a ballpark figure for the amount of savings you’ll need. It will be imperfect because it requires making assumptions about factors such as how long you will live, what the inflation rate will be and how your investments will perform. Nevertheless, making an estimate is a valuable exercise.
An individualized assessment of your retirement income needs will be far more valuable than any one-size-fits-all formula. With our no cost, no obligation Retirement Income Analysis we will play out a variety of scenarios and look at all the factors that go into answering this question.
Do you know the appropriate spending rate from your nest egg to insure your savings last your lifetime?
If you thought it was hard to grow a nest egg, try living off one in retirement. A lot is written about how to build a nest egg, but not as much about taking money out. Most have no idea how dangerous it is to withdraw too much from their nest egg each year. As Baby Boomers make the transition from career to retirement, more and more people are grappling with the question, How much can I safely withdraw from my nest egg each year? In today’s low interest rate environment, that poses even bigger challenges. The presumed safe withdrawal rate of 4% has come under fire in recent years. What’s an investor to do?
The Wall Street Journal said a 2% withdrawal rate is bullet proof, 3% is considered safe, 4% is pushing it, and with 5% or more, you risk running out of money, especially if you live into your 90s. In our no cost, no obligation Retirement Income Analysis, you’ll see the outcomes with various withdrawal rates.
Do you know what percent of pre-retirement income you need to replace to maintain your current standard of living in retirement?
Estimates of the percent of your pre-retirement income you’ll need to replace in retirement to maintain your standard of living vary greatly. Conventional retirement wisdom says that it’s vital to replace anywhere from 70% to 85% or even more of pre-retirement household income. The reality is that on average, most Americans aren’t able to do that. It’s tough to know how much income you’ll need in retirement. The older you get, the less you’ll spend. Typically, retirement age triggers a number of changes in your spending patterns. For example, you may have paid off your mortgage. Your children may have finished college and moved away. Health care costs may use up a greater portion of your income. You may have to pay more to make sure your insurance needs have been met. Spending on leisure activities, such as travel, entertainment or hobbies, may increase significantly
The good news is that as a general rule, the longer you live, the less you spend with health being the key factor. In our no cost, no obligation Retirement Income Analysis, we will help you arrive at meaningful percentages based on your specific situation.
Do you know how the rising cost of health carecould affect and even decimate your retirement income plan?
It’s a fact that health care costs have increased at a record pace, and many believe they will continue to rise. Everyone knows the old saying about death and taxes. But there’s one more certainty everyone who retires will need to face: the staggering cost of health care. Most people don’t appreciate the significant impact health care costs can have on their retirement savings. Yet these expenses can overwhelm even the best-laid retirement plans. Nearly 9 out of 10 are flying blind when it comes to understanding, what could be for many, one of your largest costs in retirement. If you’re like most, you’re underestimating these expenses. Many retirees are not prepared for the high-cost of medical care in retirement when they are no longer part of a company plan. And, too many people believe that Medicare covers most or all expenses. The reality is that Medicare only covers a percentage of your medical bills.
Health care expenses are a significant part of spending in retirement, and should be one of your greatest concerns. In our no cost, no obligation Retirement Income Analysis, we will help to estimate what these costs will be and incorporate that into your plan.
Do you know what your pension annuity is worth and what it costs to buy more lifetime income?
Some pension plans guarantee a monthly payment for the rest of your life, while others only offer a lump sum of money. If you’re fortunate enough to be among the 29% of Americans with a company-funded pension, you probably have to make a one-time, irrevocable decision on how you want to receive your benefits. Should you take a lump sum payout or the pension annuity with monthly payments? This sort of dilemma is faced by hundreds of thousands of people each year, as they approach retirement. Which option is best for you? It depends on your plan’s options, your retirement needs, and your current financial situation. There are trade-offs you face between taking the pension lump sum at retirement or opting for the pension annuity. Regardless, there are several factors to consider in making a decision. For many retirees, it’s the single most important decision they face.
In our no cost, no obligation Retirement Income Analysis, we will help you to understand your options including a series of regular periodic payments for life, a lump sum or a combination of the two. After examining your situation, we help you determine which option is right for you.
Do you know how longevity affects funding a retirement that may well last 30 years or longer?
Thanks to healthier lifestyles and breakthroughs in medical technology, life expectancy for Americans has increased significantly during the past half-century. While it’s good news that you can expect to live longer in retirement and have a better quality of life, it also means your investment portfolio may need to last for 30 years or more. The average life expectancy for a 55-year-old male is another 24.3 years. For a 55-year-old female it’s another 27.8 years. But who’s to say you are average? Retirement planning is not about planning to average life expectancy; it is about planning beyond life expectancy. While most Americans now expect to live longer than previous generations, many have not factored longevity into planning for retirement. Very few people have saved enough money to live their pre-retirement lifestyle for 30 or even 40 years.
It is important to understand you have a good chance of living a long time, which means you must have vastly more retirement assets than previous generations. Our Retirement Analysis will show you the actions to take to ensure you do not outlive your assets—no matter how long you live.
If you have a retirement shortfall, do you know how big it is and what can be done about it?
A new research report calculates the nation’s retirement shortfall topping $14 trillion. The magnitude of the retirement savings shortfall is staggering. One of the biggest risks to a comfortable retirement is running out of money too soon. With the repercussions of the Great Recession—investment depletions, companies cutting back on pension plans, and a Social Security system in need of revamping— Baby Boomers and those of younger generations will need to plan adequately to overcome the potential shortfalls of retirement income they once relied on. Given how quickly life expectancies are going up, the risks are only getting greater. Matters are more dreadful still because the low interest rate environment and current return expectations on one’s retirement assets mean that it takes more money than ever to retire comfortably
In our no cost, no obligation Retirement Income Analysis, we will examine your savings and investments, estimate your expenses, take into account your retirement goals, and determine whether you have a retirement surplus or shortfall. If it’s a shortfall, how big is it, and what can be done about it?
Do you know the proper way (most tax efficient way) to leave a financial legacy to your heirs?
You’ve worked hard to accumulate wealth. As you contemplate passing it on to the next generation, keep in mind there’s someone who wants his cut—Uncle Sam. Estate planning is never easy. The mechanics of the process are easy, but require a lot of thought and planning. In a nutshell, estate planning is the ability to pass the assets you’ve accumulated to whom you want, when you want, the way you want in the most tax efficient manner, minimizing estate taxes and probate costs. There is a right way and a wrong way to pass your financial legacy to your heirs. The most recent example of the wrong way is actor James Gandolfini. He died with an estate worth an estimated $70 million, but according to experts, the late Sopranos star’s will is a “disaster” that could see over $30 million of his estimated $70 million estate go to the government.
In our Retirement Income Analysis, we’ll share with you how to pass on your hard earned assets in the most tax efficient way to minimize your estate taxes and probate costs so as not to leave a significant percentage of your estate to the IRS.
Taking everything into account, do you know if your retirement income plan is sustainable?
In the good old days, retirement was pretty simple. You worked 30 years, got a pension, and put your money in fixed income to make it last. But this isn’t your father’s retirement. Back then, life expectancy was such that people only spent less than a decade in retirement. Today is different. Much different! After working for 30 years, it’s not out of the question to spend another 30 years in retirement. And that, for lots of people, is the big worry. People getting ready for retirement are worried that they won’t be able to save enough to last. And people already in retirement worry they will outlive their nest eggs. People are living longer than ever before, dramatically altering the financial challenges in retirement. Increased longevity is a blessing, but it’s an expensive one, because that translates into the need for a bigger retirement nest egg and access to secure retirement-long income.
Will you outlive your money or will your money outlive you? How will you know if your retirement income plan is sustainable? In our Retirement Income Analysis, we take everything into account and we’ll be able to tell you if you’ll be able to make it to the finish line.