Retirement Income Blog

You may be able to achieve more of what you want for retirement than you think. The right retirement advisor, often can help you see implications of your actions, decisions, and wishes and how they impact your retirement and estate planning. But your advisor cannot help you unless he knows what wishes are ultimately on your mind.

Retirement planning–in the most general sense–seeks to optimize a retirement income consistent with what makes you happy and financially comfortable. You can start with a simple tool like the retirement income calculator but you need to explain to your retirement advisor in detail, what you desire for your retirement lifestyle–how many trips you want to take, do you need to stay at the Ritz or will a tent be okay, how often you need to done out, go to theatre, etc. And the choices you make impact both your retirement and estate planning because the more you spend in your retirement years, the smaller estate you leave.

Your required retirement income depends on the amount of assets you have, how you intend to use and draw upon them, where you will live, and if you intend to work during some of your retirement years.  How these questions are answered can have significant impact on optimizing what you have. What’s left will dictate a lot about your estate planning since as mentioned, retirement and estate planning are two sides of the same issue.  Of course, how you protect your estate are matters of specific trust and estate planning.

Your legacy may include a donation to charity and bequests to your children and others. How you make charitable donations and bequeath to others can be achieved in a variety of ways through various financial planning approaches. And how much can be devoted to these desires will depend on the amount in your estate.

There’s a general rule offered by most retirement advisors that you can spend 4% to 5% of your nest egg annually and it will remain intact.  Remember that if you spend 5%, your nest egg needs to earn a lot more to compensate for cost of living adjustments and also taxes.  To have $10,000 to spend, your nest egg needs to generate $12,875 if we assume $2,500 goes to taxes and another $375 needs to get reinvested into the nest egg to compensate for the following year when costs will be 3% higher.

For many people, retirement and estate planning are competing goals because what you spend, you cannot bequeath.  In fact, many advisors will show you that you can  “annuitize” your next egg–i.e. spend not only the income but also some of the principal each year so that you have more spendable income.  Of course. if you erode the principal, the heirs get nothing.

A good retirement advisor can help you minimize the tradeoffs of retirement and estate planning. For example, maybe you want to leave your home to charity but want to reside in it for life now. (You get a tax deduction if you make the arrangement now that you otherwise miss if you leave the home at death.) You can in fact have both of these–live in your home for life, leave it to your favorite charity and even get a tax break today. Experienced retirement advisors are aware of how factors supporting your goals are interrelated, often through complicated tax, social security rules, and financial strategies.

To see what you can actually achieve, you need to talk openly to your retirement advisor about your ideas and wishes.

Bookmark It

The typical sources considered for retirement funding are

• 401k and retirement plans (IRAs)
• Pensions
• Other savings
• Social security

But you have huge opportunities to gain retirement funding from other sources under your own steam, during retirement.  These other sources are not often mentioned by retirement advisors unless you pay a fee for their advice as there is no commission to be made for the following recommendations.

Part time work—what are you going to do if you don’t work—watch Oprah reruns?  Although the unemployment rate is up slightly because of a weak economy, we are heading into a labor shortage with more jobs than workers.  There will be demand for your paid time.  And don’t fret about your page—any employer would rather have a worker from the baby boomer generation than a Gen X or Gen Y employee as their work habits are not what they truly desire.

Self Employment—there are gobs of opportunities for retirement funding if you are willing to learn something new.  For example, if you want to invest in real estate but don’t have any money, there are plenty of companies that will provide money for you to find underpriced real estate and split the profits with you.  You must think like an entrepreneur to profit from the myriad of such opportunities If you are not willing to learn, forget it.  Spend a day searching the web and you will quickly be overwhelmed by work-at-home entrepreneurial opportunities–super sources for funding retirement.

Multi-level Marketing—a type of self employment not to be shunned and quite suitable for funding retirement.  There are millions of people involved in this very social way of making money.  If you are rooted in your existing opinions and not open-minded to such opportunities, don’t expect to generate more retirementnd.

Phone Sales—Hundreds of companies need people who can conduct successful sales conversations and close business. Work from home.  Don’t know how to sell?  Take a class.  Most people in sales have never taken a sales training class so you’ll be ahead of the crowd if you do.  And you can wow your peers with this very lucrative method of retirement funding.

While visits to a retirement advisor can help with tax planning, passive investments in stocks, bonds and funds, when it comes to generating your own income, the Internet will be your best source of information.  Also attend “work-at-home” expos which come to most large cities.

Bookmark It