Can I Retire?
This is often the primary question. Can I retire now? How much can I spend and not run out? What do I do with my 401(k)? How do I get income? What about taxes?
Most of us have worked since we got out of school. We’ve had a steady paycheck every two weeks for as long as we can remember. What will you do when those paychecks stop? Where will your income come from? How will you know how much you can safely spend and not run out? These are perplexing questions.
There are many variables, and your situation may be similar or different than someone else’s. You might be single or married. Maybe your kids are still in college or living at home. You might be raising grandchildren or caring for a parent.
Maybe you have a pension, or you don’t but wish you did. Perhaps you will be getting a portion of a former spouse’s pension. Will you be better off taking your social security now or later? Take your social security or spousal benefits? What’s different if you’re divorced? What about widowed? Can you take widow’s benefits from social security and work? Can you afford to continue to help your children like you have been? Will you have enough if your spouse dies, and your social security or pension income is reduced?
We’ve looked at these questions hundreds of times. This does get easier with repetition. If you have questions like these, we will be happy to talk through the variable in your unique situation, explain your options and discuss pros and cons to your various options.
If you decide to visit with us, we will spend an hour or two talking with you about your situation and answering your questions. We will thoroughly review your current circumstances, understand and answer your questions.
We will then put together a financial plan based on conservative assumptions about investment returns, tax rates and social security benefits. If applicable, we will model out different options you may be considering on social security or pension options so you can see how an individual decision impacts your overall plan.
We will walk though how we think things can look financially for you. Then we will explain what we do for our clients and what it would look like to work with us.
We find that our clients choose us because they like and trust us. We speak in easy-to-understand language and make what can seem tricky and complex seem simple.
Clients hire us because they want someone who has done this a bunch to look out for them. They want to be able to pick up the phone and call us with a question about their situation and we immediately know who they are and remember their situation. We can do that because we are small, and we serve a limited number of clients. We have zero advisor turnover because we’re both owners of the firm. At 41 and 36, we’re relatively young, so you don’t have to wonder if you have to find a new advisor later because yours retired. We have many years of serving our clients in front of us.
Cash Flow Planning
Simple online calculators are a good starting point, but your situation deserves individual analysis to ensure you have the best information to make decisions with. We build a financial plan tailored to your circumstances that can help show what things may look like over the years. We try to fit it on one page so it is easy to understand. Conservative assumptions about investment returns, social security and income tax policy are incorporated with the idea that probably one or two assumptions will end up being too conservative so that reality ends up being better than modeled.
Social Security
You may have heard there can be $100,000-$150,000 difference in total benefits collected depending on when you begin your benefits. For most of us the amount we will collect is a function of when we begin taking benefits and how long we live. Two people with the exact same social security benefits may be better off doing different things depending on their situation. How long did your parents live? Do you have any health issues? What other income sources do you have? Are you most concerned about the next 10 years or the last 10 years? Is there a chance you may run out of money? How do retirement accounts and income taxes play into your social security decision?
If you have questions about what social security strategy may be best for you, we can walk through the considerations in your situation.
Variables to consider for your social security decision: life expectancy, your spouse’s life expectancy, income tax considerations, Roth IRA conversions, other income sources and timing, investment amounts and types, will you be receiving a pension from certain employers that did not pay into social security, will you inherit assets later, what is more important enjoying retirement in your early years of retirement or leaving the most assets to your children.
Pension
Many pensions give you a choice. Lump sum or monthly payments for life. Which is better? Lots of people choose the lump sum option because they figure the certainty of a dollar today is a safer bet. Who knows what will happen with my company after I’m gone? If I take the monthly, my kids won’t get anything when I die. If I take the monthly inflation will make it worth less over time. All valid points. To help with the decision we help frame the options with some math that asks the question if you take the lump sum, what rate of return will you need to earn on that money so that if it paid you the same amount as the pension would have paid you, it does not run out. The higher the required rate of return, the more attractive the monthly pension option. The lower the required rate of return, the more attractive the lump sum option. Lump sum amounts typically vary with interest rates so that when rates go down, lump sums go up and when interest rates rise lump sums go down. When you visit with us, bring your options and we’ll help you compare them mathematically, so you don’t make a mistake. There are some companies who even today still have a very attractive monthly option, even with interest rates being low.
Medicare
We refer Medicare to a Medicare specialist we’ve been working with for close to a decade. He’s good.
Estate Planning
While we both have law degrees and passed the TX bar exam, neither of us practice law. We refer clients with estate planning needs to a qualified estate planning attorney.
Income Tax
As part of the financial planning process and annual reviews for clients we may be able to point out some potential income tax planning options, but we do not prepare income tax returns.
