Any solid financial plan is built on a foundation of risk protection. It’s difficult to reach your financial goals if you are vulnerable to risk. It takes only one sizable threat or unexpected event to create a financial crisis and throw your planning off track.
You probably have various types of insurance to minimize your risk exposure. For example, you may have health insurance, life insurance, homeowners insurance and more. If you’re like many Americans, however, you may not be protected against one significant risk—disability.
Are you recently retired or nearing retirement? If so, you may believe that a financial plan isn’t necessary at this stage of life. After all, retirement planning is a major component in most financial plans. If you’ve already achieved your retirement goals, do you still need a plan?
The truth is that retirement planning is just one piece of a comprehensive financial plan. Even after you retire, you will still have other financial objectives, challenges, and needs. You’ll need to make your retirement assets last through your lifetime. You may have legacy goals on how your estate is distributed after your death. You will likely face health care costs and other financial risks. A comprehensive financial plan can help you tackle these issues.
Today’s retirees face an unprecedented level of financial risks. People are living longer than ever, stretching the amount of time that one’s retirement savings must last. Health care and long-term care costs continue to rise, placing added financial pressure on older Americans. Volatility in the investment markets can threaten your financial stability in retirement.
There’s one other financial risk that you may not have considered. It’s inflation, which is the incremental increase in the price of goods and services from year to year. Inflation is caused by a wide range of factors, including interest rates, economic growth and much more.
If you’re like many working Americans, your 401(k) may be one of your largest financial assets. The combination of regular elective contributions and matching employer contributions can help a 401(k) balance accumulate quickly.
One of the most powerful features of a 401(k) is the fact that growth isn’t taxed as long as the funds stay in the account. That tax deferral can often help funds compound at a faster rate than they might in a taxable account. You pay taxes on your 401(k) funds when you take distributions, and if you take a withdrawal before age 59½, you could also face a 10 percent early withdrawal penalty.
One of the essential goals of any retirement strategy is to ensure your future financial stability when you’re no longer working. A key way to do this is to reduce your expenses in retirement as much as possible.
Taxes are one of the biggest expenses retirees often face. As a retiree, you’ll likely be required to pay taxes on Social Security, pension benefits, retirement account distributions and more. This significant tax bill often takes many people by surprise, and it can critically affect your retirement savings.
You might think of estate planning as something for only the wealthiest Americans. The truth is, though, estate planning is an important process for anyone who has accumulated assets, not just the ultra-wealthy. It’s a common assumption that estate planning only regards estate taxes, but in reality, this isn’t the case.
Think of estate planning as legacy planning. It’s about building and protecting your legacy for your loved ones after you pass away.
If you have a qualified retirement account, like a traditional IRA or 401(k), you probably already know they can provide an effective way to save while you reap the benefits of tax-deferred growth. That means you don’t have to worry about paying taxes while your money is in the account.
Are you one of the 64 percent of Americans concerned about not being able to afford retirement?1 It’s understandable to have that concern. Retirement is a substantial financial goal, perhaps the biggest financial challenge you will ever face. You likely don’t want to continue working during a time when you should be out enjoying your golden years.
It’s a New Year, which means it’s time for New Year’s resolutions. You might be thinking about losing weight, spending more time with friends and family or picking up a new hobby. As you’re looking at New Year’s resolutions this year, you may also want to consider making some around your retirement savings.
Todd Gregory of Gregory Financial Group recently appeared on the syndicated financial talk show Right on the Money with Steve Savant to discuss investment risk analysis and management. In the segment, Mr. Gregory and host Steve Savant talk about the fact that many baby boomers have a portfolio that doesn’t align with their risk tolerance.