Financial Strategies have more to do with financial decisions and the way you arrange your affairs, than with specific investments. Once the financial strategies have been determined, then the proper investment portfolio strategies and specific investments can be determined – with an eye toward controlling costs wherever possible.
As Benjamin Franklin advised, “A penny saved, is a penny earned!”
There are many decisions in retirement that affect other aspects of retirement. For example, deciding when and how to take social security income can have a huge impact on the total amount of social security you receive over the years, but may also affect your spouse’s social security income and can impact your taxes. Should you take your pension as an income stream for your life only or for you and your spouse’s joint life? Or would it be better to take it as a lump sum IRA rollover instead? What about employer stock in a 401k? Sometimes it is better not to roll it over to an IRA, but instead to transfer it to a non-IRA account where it may receive a more favorable tax treatment. Deciding whether to buy a car for cash or to finance it or to draw the payment from an IRA account will affect your income, your liquidity, and your income taxes. Should you draw income from your IRA or Roth IRA first? Are the guarantees of an annuity in your best interest or are there other options that may be more effective? Should you invest in taxable bonds or in municipal bonds or no bonds at all?
How you answer these and many other questions could be the difference between a comfortable retirement or one cut short by the need to go back to work or to reduce your desired standard of living.
We offer a complimentary financial review to assess your financial preparation in key areas including:
–Liquidity and Cash Flow–Is your current plan sufficient to meet cash and income needs throughout retirement? Is a large portion of your portfolio locked up in investments that will suffer in a more inflationary environment?
–Investment Portfolio—Is your current portfolio strategy prepared to withstand a flat or down market and is it designed to target the rate of return you will need to comfortably achieve your retirement goals? Do you even know what rate of return you need to target in order to achieve your goals?
–Risk Analysis—Are you taking too much risk to achieve your goals? What about unexpected or undesired events such as a significant market decline or the high costs of paying for long-term nursing care? If you predecease your spouse will the drop in social security income and/or pension income have adverse effects?
–Tax Planning–Could your assets or affairs be better arranged to reduce or eliminate your income tax burden?
–Estate Planning—Have you arranged for your hard-earned assets to go to your children or causes that are important to you without making the U.S. Gov’t your largest heir or paying a huge sum in attorney fees? How will your financial affairs be taken care of in the event you become incapacitated? Do you need a living trust or other documents? Are there other advanced strategies that could significantly improve your situation?
Once the initial Financial Strategy questions have been answered, you will be able to determine the rate of return you will need to target in order to achieve your retirement goals. Then you are ready to select the appropriate Investment Strategies.