Do You Have a Retirement Account or a Retirement Plan?

For today’s retirees who are going pensionless into their golden years, it’s important to understand what all this noise about “retirement planning” is really about. A lot of people think because they have a 401(k) or an IRA that they have already done their retirement planning. This couldn’t be farther from the truth.

If you have investments – stocks, bonds, 401(k)s, life insurance and IRAs –  then what you really have is a collection of parts. That’s like having a crankshaft, spark plugs, pistons, and an alternator instead of having an engine. A collection of investments is not the same thing as having a plan. Without knowing how to put everything together, you might not get very far when it comes to generating income and this, more than anything, is what leads to every retiree’s worst fear: running out of money.

WHAT’S IN A PLAN

It’s been said that people spend more time planning for their vacations than they do planning for retirement and it’s no wonder – financial planning doesn’t sound very fun. But when you consider that today’s retirees are enjoying longer life expectancies, then you’ll understand the need for more income has expanded. Planning for retirement, then, is in many ways just like planning for one long vacation.

When you have a plan put together, you know the answers to the following questions:

• On the day that I retire and stop drawing a paycheck, where is my income going to come from?
• Where should I put my 401(k) and IRA money?
• If something happens to my spouse, will they have enough money?
• How much will my health care cost without my employee benefits?
• When is the best time to take my money out of my accounts so I pay as few taxes as possible?
• What spousal benefits am I entitled to under Social Security rules and when is the best time to file?
• Is there a way I can obtain long-term care insurance even with a health condition?
• Is there a way I can buy a new car without paying fees, penalties, and extra taxes just to get my money?
• Do I know when to take my RMD?
• Have I heard about the QLAC?
• Do I really need life insurance?
• Am I accidentally disinheriting my children and grandchildren because of a stupid mistake?
• Do I know how to take advantage of the Stretch IRA?

GET A PLAN, GET A LIFE

The Social Security Administration office is not allowed to give you advice about when and how to file for your Social Security benefit; they can, however, send you the paperwork. Your Human Resource department at work might give you some advice about your health insurance benefits, and your tax guy might tell you about the IRA penalties, but who will coordinate all these decisions together so that your portfolio hums along, giving you the greatest mileage with the most efficiency?

Getting the right kind of advice at the time of retirement is even more important today than it’s ever been. With forces like inflation, rising healthcare costs, low interest rates on guaranteed products and high market volatility, every dollar you have saved in your retirement accounts needs to pull its weight.

If you’ve worked hard and saved for retirement, then you deserve a plan that coordinates income, taxes, and investment considerations with your goals and priorities. A plan isn’t something you can buy off the rack like a T-shirt or a ball cap. It’s something that needs to be tailored using the materials of your investment portfolio, your family situation, and your goals.

You have worked hard to earn the collection of parts that make up your investment portfolio. Isn’t it time to put everything together to get your income up and running?