12 Parts of a Successful Retirement Plan

12 Parts of a Successful Retirement Plan

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Believe it or not, creating a successful retirement plan could be easier than you think.

Many leave their retirement up to the bankers and brokers that manage their assets, just like they have done in their 20s, 30s, and 40s. However, many retirees may actually get financially hurt in retirement by using those strategies provided by the bankers and brokers.

This is where creating a successful retirement plan is essential. Avoiding the young person’s retirement strategy and putting together a successful retirement plan could be the difference between enjoying a full retirement or a retirement cut short.

Here are 12 parts to creating a successful financial plan for retirement, in our opinion.

Part 1: Use a Distribution Plan

Most retirees are currently using an asset allocation “pie chart”, which doesn’t work in retirement. Using the asset allocation “pie chart” puts your entire retirement at risk. When markets get slammed, you could find yourself back at work after the age of 65.

A distribution plan may be one of the most effective tools in planning for your retirement and has the ability to help you understand mathematically how much money you can withdraw every single year during retirement.

Part 2: Know How Much Income You Could Spend

If you don’t know how much money you can take as income, and you have not done the proper calculations, you are guessing. If you are guessing, you are putting your retirement at risk. Knowing how much you make and how much you can spend are two of the most powerful financial assets in any retiree’s arsenal, in our opinion.

Part 3: Take Less Risk

Surprisingly, most of the clients that come into Decker Retirement Planning have most of their money at risk after dealing with bankers and brokers.

Whether it is planning with a pie chart model or investing in annuities, there are many ways to reduce your risk.

Part 4: Eliminate Interest Rate Risk

Interest rate risk – When interest rates go up, you lose principal on your bonds and bond funds. Many retirees have their money invested in bonds and bond funds and that money could be in danger of large losses when interest rates go up from their current position.

Part 5: Get a Good Return on Your Safe Money

With rates so low, it is a challenge to get a good return on principle guaranteed investments. The principle guaranteed accounts have used over the last nine year have averaged about seven percent.

Most retirees that invested in Certificate Deposits (CDs) are lucky to find five year returns above two and half percent. Ten year returns are lucky to be around three percent or so.

Part 6: Use Trend Following Risk Models

With the American economy moving towards the end of its seven-year market cycle, we are closely watching market trends and assessing the risk towards our client’s risk money.

Bankers and brokers will many times leave their client’s money in the funds that crash with the market and tell their clients to “ride it out” instead of assessing the risk beforehand.

Part 7: Lower Your Taxes

Tax season is never a pleasant time for anyone. But reducing the amount of taxes you are paying may save quite a bit of money that can be invested in retirement.

Part 8: Use a Roth Account Properly

Many people with a Roth account are not using it properly and take out money in the first five to ten years of investing in the account.

These accounts should be the longest-term investments and the highest growing accounts. So, using it properly could be a huge asset to any retiree.

Part 9: Stay Away from Variable Annuities

Variable annuities sound great on paper to many retirees. These accounts are actually more beneficial to the bankers and brokers than they are to retirees.

There are three different layers of fees that get taken out of a variable annuity before you can make anything.

The banker or broker makes about eight percent commission for selling it. The banker or broker also gets paid every year you own it. Then the mutual fund company gets paid every year you own it. On top of that, the insurance companies get paid each year you own it.

This could reduce your account by up to seven percent and on top of that, there is no downside protection when the market drops.

Part 10: Review Your Will

Having an organized and reviewed Will may prevent headaches for your loved ones after you pass. Making sure that you have a first and second executor on your Will could help streamline the process.

Also, making sure that you have all of your tangible assets assigned to specific recipients could eliminate a lot of trouble. Check out the episode of Decker Talk Radio about Holiday Estate Planning for more information on tangible assets.

Part 11: Eliminate Estate Tax

Having an estate over 2.2 million dollars may lead to large amount of estate taxes for anyone who is involved. We can’t stress enough to take the time to help make sure your family doesn’t lose a lot of the money you intended for them.

Part 12: Protect Yourself Against Inflation

Inflation can be a damper on anyone during retirement. Making sure that you have income for the next 20 years is crucial.

Make certain the dollar you have today is going to pay you the dollars that you need to receive net of inflation in 15 to 20 years from now.


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