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10 Retirement Concerns You Can't Afford to Ignore

10 Retirement Concerns You Can't Afford to Ignore

| June 01, 2023

A comprehensive retirement plan should help you create the retirement life you've been dreaming of but gaps in your plan can create significant problems. To help you avoid the most common (and costly) pitfalls of retirement planning, we've curated this list of the top 10 retirement concerns you can’t afford to ignore. 

  1. Partnering With an Experienced Financial Advisor - Financial planning is complex and not the best DIY project to take on. You're the most knowledgeable about your retirement dreams, and an excellent financial planner knows how to make it happen. Leverage both by establishing your relationship before retirement and meeting regularly to update your plan as you get closer to your desired date. Be open, honest, and detailed about where you are financially and where you want to be. Ask for case studies to ensure they have experience with portfolios similar to yours.
  2. Establishing Your Cash Flow Plan - Not knowing how much you can spend for retirement makes it hard to tell if you have enough assets to live the life you want during retirement. Remember, the goal is to leverage your assets to live a fulfilling retirement life, and not to pinch every penny and worry your way through your retirement. The sweet spot is to create a plan that allows you to maximize your enjoyment of the assets you have worked so hard to accumulate.
  3. Creating a Comprehensive Tax Strategy - You can't afford to ignore taxes! Your tax plan can make or break your retirement budget. A robust tax plan based on your age, types of assets, and estimated length of retirement will create a strategy to minimize your tax liability. You can create substantial savings by being intentional about which assets you tap into first and which you save for mid-retirement. 
  4. Building in Expected Medical Expenses - Forgetting to plan for your long-term medical expenses can devastate your retirement assets. Most retirees will transition to new medical and dental coverage when leaving their employer. Sharing chronic health issues or a family history of significant illness with your financial planner is essential to ensuring you have the insurance coverage and the resources to cover unexpected problems. Pre-retirement can also be the best time for expensive treatments or testing, especially if your current health insurance plan covers them. 
  5. Reducing Your Debt Loa- Saving money is only one aspect of retirement. Reducing the amount of debt you carry going into retirement will reduce your monthly expenses and increase the net value of your estate. If you are carrying debt with a variable interest rate, reducing the balance or preferably paying it off provides the added benefit of protecting your monthly budget if interest rates increase. 
  6. Making the Right Decisions About Social Security - There is a lot of misinformation and fear surrounding Social Security. Claiming it too early or late can reduce the value you get from your payments. If you're married, staggering when each of you files can be highly beneficial, especially if one partner had significantly fewer earnings. Often when spouses have different earning levels, it's more helpful to stagger filling dates using a spousal claiming strategy. An experienced financial planner will assess your unique situation and determine the optimal time for claiming social security. 
  7. Leaving Room for Inflation -The rising cost of living will erode the purchasing power of your assets. Building inflation estimates into your strategy is essential so you don't run out of money during your later retirement years. It's critical to make wise decisions about the appropriate level of risk as you head into the early years of retirement. Continuing to grow your portfolio during the early retirement years will reduce the chance that inflation will devastate your cash flow plan. 
  8. Shoring up Your Estate Plan - Good estate planning isn't just ensuring you have a will. A comprehensive plan also includes provisions for your final years and when you are incapacitated. Filing (and keeping up to date) financial and medical power of attorney documents and a living will, protects your assets, communicates your wishes to your family, and designates a primary decision-maker for complex situations. Evaluating your life and long-term care insurance will also help protect the assets you plan to pass on. 
  9. Reducing Your Beneficiaries’ Tax Liability - Most of us dream of leaving a generous inheritance to our loved ones, but no one wants to overpay taxes on that legacy. It's essential to consider your children's income level when planning what to leave them and how best to minimize tax liability. Strategically picking who gets which assets are critical if you have a large bank of assets that your children will inherit and they have a significant annual income. A thorough retirement plan includes estate planning to maximize your impact by reducing the fees and tax liability your beneficiaries must pay.
  10. Maximizing Charitable Giving - When it comes to estate planning, all assets are not created equal. There are significant variations in fees and tax liability based on the type of assets. For example, if your children inherit your IRA, they will lose a substantial portion to taxes, but a non-profit won't face the same tax liabilities. In many cases, it's better to pass on as much cash and physical assets to individuals while leaving the assets with more restrictions to charitable organizations if that is part of your plan. 

Remember, it's essential to consult with a financial advisor or retirement planner to address these concerns and tailor your retirement plan to your specific needs and circumstances. 

Retire Confidently with Bestgate Wealth Advisors

Our team, composed of experienced CPAs and CFP® practitioners, integrates genuine tax planning into your financial and investment strategies. Contact us today to start planning for your best future.