Planning for Retirement
Whatever one’s situation in life, retirement is a universal goal we look forward to and perhaps dream about. Unfortunately for most of us, planning for it is something we don’t do well, if at all. If you feel a bit overwhelmed by the process, you’re in good company.
If you subscribe to the common belief that financial planning is a project you do once, and then forget about, you may be pleasantly surprised to learn more about our approach. Helping people who are concerned about planning for retirement properly—and not missing anything important is our specialty.
Retirement Planning Projections: It’s all About Cash Flow
It goes without saying that at some point, usually beginning in your 50’s, it’s a good idea to “run the numbers” and see how your retirement savings goals are faring. Sigman Financial Fitness® focuses on cash flow management and maintaining sustainable withdrawal rates from your retirement savings, so you understand the trade offs, risks and opportunities that impact your ability to enjoy a worry–free retirement. For clients with substantial estates, it is critical to factor in estate planning decisions to the projections, to make sure that the appropriate assets are sheltered from tax liability.
What Should I Save For First?
As you accumulate funds for retirement, it’s important to figure out where your savings dollars should go: To an emergency fund or paying off debt? To taxable or tax deferred accounts? To a larger home or college for your kids? To vacations, an RV, a time share, or a second home?
It’s important to distinguish between the liquid funds “investing assets” you will require for retirement, and the capital spending on such “use assets” as homes, furniture and automobiles.
After all, you have a limited amount of funds that are earmarked for future needs, and it’s important to get the biggest bang for your savings dollar as possible. So making good choices about where to save is as important as what securities you have invested in.
Once you reach retirement, it’s important to figure out what sources of funds should be drawn down first, (such as do I withdraw funds from my Traditional or my Roth IRA first?) and what assets should be sold or bought (i.e. moving to a smaller home, remodeling an existing home, purchasing a second home). Also it’s a good time to look at your debt structure and determine if you should pay off certain mortgages or home equity loans, or refinance.