Retirement Spending Strategies

 Retirement Planning, Social Security Withdrawal Planning  Comments Off on Retirement Spending Strategies
Jun 282016

Michael Kitces recently had a blog posting regarding tax efficient spending strategies from retirement portfolios.

He notes that the conventional wisdom is to draw down taxable accounts and let the tax deferred account continue to grow.  However as with most rules of thumbs or short cut decisions this one does come with a caveat of its own.

If you’ve done a really good job of accumulating tax deferred savings, you may want to consider an alternate strategy. This is especially so, if your required minimum distributions are potentially so large they will put you in a higher tax bracket than expected when they start.

If that is the case you may want to consider drawing funds from you IRA during the early part of your retirement to reduce the size of the future RMDs. Even if you don’t need the funds for your retirement living spending plan, you may want to convert traditional IRA funds to Roth IRA funds to at least get your income up to the tax bracket you are most comfortable with.

The conventional wisdom is generally correct in that deferring taxes and using those funds to build your retirement savings is a good plan. However as you approach the last few years until you actually retire and especially in the last few years before Required Minimum Distributions come into play, some additional planning with regard to income taxes will likely be beneficial.

For additional information on this, you can check out Michael’s blog or better yet, just get ahold of me and we can talk about your individual situation.


Jun 172016

This post will cover the last of the Four C’s.

Cost of Living or inflation will need to be considered.

  • Inflation
    • Obviously if you are living on a fixed income with a relatively fixed asset base, inflation will be a challenge for a successful retirement
      • Recently it has been 2% or less
      • During the 1970’s, it was 8% or more
    • Healthcare costs have been increasing a substantially fast pace
      • Clearly healthcare cost will have to be factored into a retirement plan in some fashion
    • For many retirees, Social Security will be their only inflation adjusted income source

Certainty is something we all strive for in retirement. However many factors are out of our control. For example:

  • Life expectancy in general is increasing
    • But what will my life expectancy be
  • Healthcare costs are typically greatest the last few years of life
    • But when and how much will that be
  • Investment returns will be variable even if they are generally favorable
    • But Sequence of returns risk will be a concern

If any of this information strikes a cord with your thoughts and concerns, it’s time to schedule a visit with a financial planner.

The Changing Face of Retirement

 Retirement Planning, Social Security Withdrawal Planning  Comments Off on The Changing Face of Retirement
Jun 162016

This segment of the Four C’s focuses on Comfort.

Basically, what is your view of a satisfying retirement – what’s your vision of success?

  • Life Style Goals
    • Live comfortably – However you define it
    • Free of financial concerns
      • 35% of pre-retirees are not prepared for retirement
      • 50% are not comfortable with their retirement plans
      • delaying retirement is not a valid back-up plan
        • 47% retire earlier than planned
  • Stock Market Fluctuations
    • How important is the Safety of your investment versus the Return on your investment
      • 76% of pre-retirees prefer a nominal guarantee
  • Expense Pyramid
    • Identify which category your expenses fall into
      • NEEDS – Basic livings expense
      • WANTS – Travel, entertainment, etc.
      • WISHES – Legacy goals
    • Clearly understanding which category each expense fits into will allow you to manage and monitor your various income sources
    • Depending on your situation, you may want to consider an income / investment strategy that is appropriate for each expense category.

The next installment will discuss the last two C’s.

Jun 142016

I came across an article with this title a few weeks ago [it might have been from Allianz], which made some interesting comments about the current state of planning for pre-retirees.

  • Health and Wealth go together!

Basically it is hard to understate the impact these two factors will have on your retirement.


It also brought up the idea of the Four C’s necessary for a successful retirement:

  1. Clarity
  2. Comfort
  3. Cost
  4. Certainty

The last 5-10 years before retirement age area critical transition phase!

It is the time to consider professional help as there are a number of issues to consider. These may be more complex than any decisions, many of us have made before. All of which may have a significant impact on our retirement years.

For example, there are potentially 728 Social Security claiming options to consider depending on the age of the partners. This is in addition to the minus 25% to the plus 32% range an individual will have versus the full retirement benefit amount.

During those last 5-10 years, it’s time to identify your retirement income sources and the goals for your spending plan.

This involves making assumptions about your life expectancy, how much will you need to fund your spending plan, how you can reasonably assure yourself you won’t outlive your assets, what’s the right asset allocation going forward, what will your likely healthcare costs turn out to be, how will you handle your potential long-term care expenses, etc., etc.

More to come later on the Four C’s!

Social Security – What do you know?

 Retirement Planning, Social Security Withdrawal Planning  Comments Off on Social Security – What do you know?
Feb 232015

There was an article in the WSJ last year by Glenn Ruffenach titled What You Don’t know About Social Security – But Should.

It starts talking about an imaginary new employee who meets with his boss to talk about salary. The boss states that their payroll system is impossibly complicated. In fact, you can pick from dozens of different ways to be paid and hundreds of different start dates. Not surprisingly these all result in different salaries.

Seem odd? Welcome to Social Security!

How can this be? Well the good news is that Social Security benefits can be customized and applied for in a manner that best meets you and your family’s needs. Of course the bad news, is that knowing all or even some of these rules is really quite challenging. As a result most beneficiary’s end up using some quick short cut rules of thumb, based on “general knowledge” not a fact based analysis.

Check out the article, but if it is time for you to begin the process of determining when to draw your hard earned Social Security benefits contact DLW Planning for help creating your optimized benefit withdrawal plan.