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How much money do you think you'll need to retire?
What is that "magic number" you're trying to achieve?
Trying to achieve a savings goal is a great thing. But reaching some random number won't ensure you'll retire successfully.
This is the No.1 mistake people make. They think that once they achieve their magic number, they can finally call it quits. But when we ask what's the math behind that number, they don't have an answer. It was just a goal.
If you want to retire successfully, it'll take more than just saving and investing your money.
You need a sound plan behind that money. And when you do this, you'll be amazed how much further your money will go.
There isn't space to go into everything, but here are five pillars of financial planning that could help you make the most out of every dollar you've saved for retirement.
1 Reduce your taxes in retirement
Most people assume they'll be paying fewer taxes in retirement because they're no longer earning a paycheck. But even though you're no longer working doesn't mean you no longer have taxable income.
Withdrawals from your IRA and 401K, Social Security benefits and other investment income (real estate, dividends, etc) are all taxable. And when you add it all up, you could be paying an even bigger tax bill when you're retired.
To make matters worse, tax rates are lower today than they've been in over 40 years. And with our national debt at a record $31 trillion, you can bet the government could be raising income taxes soon. And higher taxes could leave you with even less money.
The good news is you have more control over your taxes in retirement than you know. And if you take advantage of some simple tax planning strategies now, you could dramatically reduce these taxes.
2 Replacing your paycheck
When you retire you'll likely end up in one of two camps…
One, you're living off of your retirement savings. But this means every time you spend a dollar, you see your savings shrink. So, you're living in constant fear of running out of money. And that's no fun.
If you're in the second camp, your money is working for you. You have different sources of income coming in every month, or every quarter like clockwork.
These different income sources enable you to do all the things you dreamed of doing in retirement, like spending money on your kids and grandkids, making that bucket list trip, or even buying that dream vacation home.
The key is you want to create a plan that gives you diversified sources of income in retirement. So, if one source dries up, you have other options.
3 Maximizing your Social Security benefits
Many people believe that filing for Social Security is a choice between claiming your benefits early, or delaying until you're 70.
But it's a lot more complicated than that.
Your claiming strategy could have a domino effect on the taxes with your Social Security benefits, IRA/401K withdrawals and other investment income. It could cause you to forfeit thousands of dollars every year in other benefits. And it could even double your Medicare premiums.
So deciding how and when to claim Social Security must be a coordinated effort. You must consider all of the things mentioned above — not just what will yield the biggest benefits check.
The best way you could ensure you get the most "net" income from your benefits is by getting a customized social security analysis from a fiduciary advisor.
4 Minimizing investment risk
What we've found with 99% of our first-time client meetings is that people are taking far more investment risk than they realize or need to at this stage of the game. And this is where you can really get yourself into trouble.
People rarely get hurt when the stock market is growing. They get hurt when there are significant stock market corrections or bear markets, which is what we've been experiencing with the market since the beginning of the pandemic.
When you have wild swings in the stock market, your investments can become skewed. And if you aren't checking your portfolio, you could unknowingly be invested too conservatively or too aggressively. And neither one of these scenarios is good.
The most effective way of reducing your risk is by consistently updating and rebalancing your investments. This is not a one-time thing. You should update and rebalance your investments every 6 to 12 months, or whenever there are major market corrections or big life events.
5 Leave a legacy, not a mess
When you think about the real priorities in your life, it's your family. And one of the most important things you can do for your family is to ensure that when you do pass away, your estate is protected.
If you don't have a plan to protect your estate in the state of Utah, all of your assets including your house, bank accounts, investments, and cars could be tied up in probate courts for years. And to make matters even worse, it could even get double-taxed by the government.
The best way you could avoid this is to create an estate that protects your assets and ensures those assets go directly to the people you want — not the government. This plan could also protect your privacy and help prevent any sibling disputes (which unfortunately are more common than you may realize).
Summary
Have you done more than save and invest your money for retirement?
Have you created a sound comprehensive plan that could make the most out of every dollar you've saved?
As a special offer for KSL.com readers, we will create a customized retirement game plan for your specific situation, and we won't charge you a dime.
We call it the B.O.S.S. Retirement Blueprint. This is a comprehensive plan that could help you reduce taxes; generate income; pay for healthcare; reduce risk; maximize social security benefits; create a legacy plan and so much more.
We're offering this for a limited time, and there's no cost or obligation.
If you need to make the most out of every dollar in retirement, this retirement blueprint could be the single most important tool for your success.
To schedule your initial analysis, click here.
B.O.S.S. Retirement Solutions is a four-time winner of Utah's Best of State Award. Tyson Thacker and Ryan Thacker are the President and CEO of B.O.S.S. Retirement Solutions with seven offices throughout Salt Lake City.
Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. Our firm is not affiliated with the U.S. government or any governmental agency.
