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Retiring Soon? How To Plan For It.

18 07 S Retiring Soon How To Plan For It. - Retiring Soon? How To Plan For It.

Although retirement advice normally centers around doing some new hobbies or going on a dream vacation, attorney Natalie Choate thinks that new retirees should slow down and get the boring stuff out of the way first. She states:

“Take a minute or a rainy weekend and do something boring. Find and organize all your retirement plan records. You can save yourself and your heirs a lot of trouble (and money) just by doing some paperwork.”

Although it’s not the romantic version of retirement, she certainly has a valid point. These days, people are more responsible for their own retirement funds, what with 401(k)s and IRAs which need to be carefully managed in order to extract their full value. This shift toward non-private pensions means that retirees need to be more financially savvy when it comes to their retirement fund.

Investments and stocks

If you’re looking for a decent retirement nest egg, it’s important to make some smart investments. A smart investment strategy, particularly one which operates via automated withdrawals to tax-deferred retirement accounts (like your 401k) can help you to easily build up funds in a low-risk and low-tax manner. Although the stock market is inherently volatile and there are fears of another 2008-esque crash, the stock market’s current state means that many stocks are “on sale” and are thus more affordable for people looking to secure their future retirement finances, regardless of their age.

Of course, you should always be wary of the stock market if you’re nearing retirement, as a steep market pullback could obliterate your savings if you are drawing down your portfolio. This risk could be mitigated by using cash, but experts recommend taking a middle-ground approach at the moment due to unimpressive cash yields. Robert Westley, VP and Wealth Advisor, explains:

“During bull markets, like the one we have been experiencing, clients often forget the importance of holding fixed income in their portfolios. Investors should utilize prudent asset location planning when determining where to hold their target equity and fixed income exposure”.

He goes on to explain that asset location planning requires considering the different tax characteristics of asset classes and their accounts/vehicles where they are held. Doing this helps you to gain an improved after-tax return rate, which is ideal when trying to save up as much as possible.

Social security

Despite changing measures and tax reform, retirees’ dependence on social security remains high. Luckily, favorable taxation policies and inflation protections are helping to keep social security a strong cash flow source for retirees, guaranteeing them payouts until the day they die.

Furthermore, regulations on mixing social security with regular retirement accounts and savings have been relaxed in recent years, allowing you to still receive social security money from the government while harnessing your own financial power and retirement savings.


Ed Slott, a CPA from New York, states: “Taxes are the single biggest factor in how much you can spend in retirement.” As tax reforms have begun pressuring states to tax their citizens more than ever before, retirement income becomes a big issue for those who no longer have the capacity to work. State and local tax (SALT) deductions are still capped at $10,000 per year in some states, which may make them attractive states for people to retire to if they want to minimize their tax liability and financial burden in their older age. Slott explains the complications of the current tax system for retirees:

“The IRS recently explained that conversions from 2017 can be reversed, completely or partially, until this Oct. 15. From now on, this type of recharacterization won’t be allowed.”

This means that your IRA conversions should ideally be processed late in the year, as then they will be able to grab a lower tax rate. New tax laws also mean that federal estate tax exemptions have been increased to roughly $11 million, leaving many retirees with less to worry about when it comes to planning their estates for their loved ones.

Planning for your retirement is inevitably a complicated and multifaceted process, requiring financial knowledge in multiple areas. If you’re looking for help with planning your retirement effectively, contact us today for bespoke advice.

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