Questions to Help you Tighten Up Your Retirement Plan

In our Second Opinion Service we ask a lot of questions in what we would typically call a ‘Discovery Meeting.’ These questions focus on getting the attitude and thoughts and feelings of our clients, along with collecting the hard facts on financial statements, investment reports, etc.

Some of the questions would be:

  • Are you concerned aout Social Security?
  • Are you concerned about Medicare?
  • What are your healthcare benefits?

Many of these are Federal Programs, and many experts feel that these government programs are in grave jeopardy of being underfunded. 

There has been discussion on extending the full retirement to age 70 before someone even becomes eligible. This could be a reality for those younger Social Security contributors. So we really concern ourselves with the next generation, but also making sure that we are maximizing what Social Security can be for those who are nearing retirement and answering those questions.

If you retire before age 65, the common question is “Where do I get my healthcare and what is that going to be like?” These expenses - if not factored in - could significantly change a secure retirement plan.

What About Inflation?

Look what we experienced in 2022, with inflation peaking at almost 9%.  Most of our plans for the entire life of my financial career have centered around using inflation at 3% and forecasting a very conservative and usually well-rounded retirement expectation for clients. Perhaps a new normal needs to be calculated. 

Are You Afraid of Losing Money?

Look what happened in 2022, with the S&P down almost 20%.

For my clients, we asked how long do they have to plan on recovering from this loss. How long can they continue to expose money to risk-oriented investments? These factors need to be addressed and hopefully worked into a good solution relative to a person’s retirement planning.

Are You Afraid of Outliving Your Money Supply?

Longevity is currently an issue that is not being addressed perhaps as effectively as it should. When I started my career over 30 years ago, we used longevity and life expectancy to age 85. Today, we have clients well into 85, still very active and vibrant in their retirement. So what if those projections cause you to really outlive your money? 

Do You Desire to Leave a Legacy?

This one often centers on family. Legacy planning is tricky because we want to make sure that our clients certainly have enough money for themselves but what we leave behind, is it tax efficient, and does it have meaning?

Are You Concerned About Taxes and Where They Are Going?

The Federal Government has been spending money and our national debt is increasing dramatically every year. There is no doubt that taxation is probably one of the prime factors by which this debt is going to get managed, and those who have money, that have it exposed to tax such as in 401(k)s, IRAs, and other qualified plans, could be subjected to a significant surprise as it pertains to the percentage owed.

Currently, we are probably in one of the most favorable tax environments of our lives. The Tax Reform back in 2016 provided some pretty attractive income tax brackets as well as capital gains rates. Detailed conversations about perhaps aggressively taking money out of qualified plans and calculating the true effective tax rate would be a good exercise for many of my senior clients. Once the tax has been paid on these dollars to be put into a place where they would never be taxed again, not only the principle transferred but all the growth. 

Time to Reevaluate?

I like the sunset, it is very beautiful and no two are exactly alike.  However, the sunset provision that has been incorporated into our current tax code could be a dramatic eye-opener that wouldn’t be pleasant. We know today where the taxes are... and maybe it is time that we maximize the planning relative to taxes.

Maybe it is time you answer all these questions (and there certainly are many more!)

Is it time to reavaluate where you’re at? We’d love to have that conversation with you and provide a Second Opinion on your retirement plan.

headshot of Bradley

Brian Ruh Owner, Financial Adviser

This material is for general informational purposes only and was produced by Action Financial Strategies, LLC.