Do you have a written retirement income plan?
If you’re like most people we meet, you probably do not and here’s why that’s a problem. Financial planning for retirement requires a progression of steps in order to ensure all your goals are being accomplished. You can’t progress to the next step until the previous step has been completed. Let’s take a closer look.
A Complete Retirement Plan Starts with Income Planning
When I meet a new client, we begin the process by creating a comprehensive retirement income plan designed to accomplish some important goals. First, the income plan will identify any income shortfalls or gaps that need to be filled. Often times those gaps can be filled with supplemental income from the assets you have accumulated such as a 401(k) or IRA. Next, the income plan will demonstrate the sustainability of that income because let’s be honest, running out of money is not an option. Taking the time to create an income plan is important for everyone, even for people who don’t need supplemental income.
No Income Plan = No Tax Plan
How could you possibly plan for taxes in retirement if you don’t know where your income is coming from? The earlier we start your income plan, the better the tax plan we can construct. Building a tax plan before you retire provides more opportunity to fund tax-favorable vehicles such as Roth IRAs or IULs. Did you know you can convert your traditional IRA or 401(k) into a Roth IRA? Proper tax planning can reduce or eliminate the amount of tax you could pay on your social security benefits.
No Income Plan and No Tax plan = No investment Plan
How would you know the best way to invest your assets without an income plan and a tax plan? Will you need supplemental income? If so, there are investment vehicles that are better income providers than others. You may want to explore a dividend portfolio or perhaps a portfolio that has been optimized for tax efficiency. You can’t accomplish this without the income and tax plan.
If you’re working with a financial professional who helps you invest, but has not created an income or tax plan, then that professional would be more of a stock-broker than a financial planner. A financial professional should not skip the income and tax planning step and jump right into investment planning. Make sure you are working with a complete financial planner to optimize your retirement.
Don’t have and income and tax plan? Contact our office today at (480)428-8005 if you would like to see what a customized income and tax plan would look like for you. You can also schedule your own no-cost appointment by clicking this link.
Marc Montini
