These are challenging times for so many people.  COVID-19 has forced millions of Americans into an early retirement that they were not anticipating.  Just last week the airline industry announced over 30,000 job cuts.
 
So what are you going to do?  As a licensed fiduciary I have helped hundreds of people meander through the decision to accept early retirement or not.  It’s a tough decision that I can help you with.  Here are some important steps to take if you have been forced into early retirement or believe it could happen in the near future.
 
Develop an income plan
One of my favorite quotes is, “A goal without a plan is just a wish.”  That is so applicable when it comes to retirement income planning.  A long term, sustainable income plan built in the most tax efficient manner could be the difference between success or failure.  A plan shows you where your income will come from and that it is sustainable for the duration of your retirement.  The best part is that  I’m perfectly willing to donate my time and to do this for you at no cost. Click here to request a free income plan
 
Roll your 401(k) into an IRA
Never leave a 401(k) behind.  With limited investment options, no professional management or guidance, and numerous hidden charges and fees, a 401(k) is not the place to be in retirement.  By rolling over the 401(k) to an IRA, you gain an infinite amount of new investment options that can better help you achieve your goals.  With an IRA you can buy a CD, individual stock, an annuity, or tax-free municipal bonds.  The important thing is to invest with a purpose and that purpose matches your goals and risk tolerance.
 
Running out of money is not an option
Market timing and how your money is invested will influence your success or failure.  Let’s say your unlucky and start taking supplemental retirement income while the stock market is volatile (HINT: you may have heard about a very important election coming up that can easily change the course of our economy).  And let’s say you were taking $2000/month which amounted to a 4% withdrawal rate from a $600,000 asset.  If the stock market were to drop by 20%, your new balance would be $456,000 and your $24,000/year income is now 5.26% withdrawal rate.  Let’s say the next year it happened again with the markets dropping another 20%, as they did in 2000, 2001, and 2002.  Your new balance is now $340,800 and your $24,000/year income is now a 7% withdrawal.  By being overly aggressive, trying to mitigate risk on your own and not using professional management you could jeopardize your opportunity to enjoy the retirement you dreamed of. 
 
Being forced into an early retirement isn’t for the faint of heart.  Take advantage of my free offer to build you the income plan you need to enjoy a stress-free retirement.

Please call our office at (480) 428-8005 if you want us to help you manage your early retirement.

Written by Marc Montini, IAR, and Managing Partner of Montini & Co Tax Advisory Group