The U.S. Census Bureau reports that the world population of those 65 and older is expected to double by 2060, eventually accounting for 20% of the global population.
With life expectancies continuing to rise thanks to modern medicine and scientific advancement, the risk of outliving money set aside for retirement is also increasing.
Below are a few notes for working toward your retirement outliving you rather than the other way around.
Documenting Your Plan for Retirement
Before leaving the workforce, an outline of your retirement finances as well as your strategy for building and maintaining your wealth should be written down as it is developed, ideally with the assistance of a financial professional.
Things like ordinary expenses, general income needs, and lifestyle expectations during retirement should all be taken into account.
Formulating a well-thought-out retirement plan will help to hold you accountable for making decisions that get you closer to your retirement goals as you approach or move through that part of your life.
Identifying Your Reliable Income
Reliable income is sustainable and guaranteed. Based on your circumstances, this can include Social Security, pensions, specific annuities with guaranteed income, etc.
Divide your reliable income by your general income needs, and this will provide you with your reliable-income percentage. The higher the number, the less risk you have of running out of money due to varying market conditions.
If your percentage is too low, a financial professional can assist with taking on financial products that will guarantee income down the line. If the number is too close to 100%, it may be wise to diversify your portfolio and leave room for more potential growth and liquidity.
Potential Risks and Preparation
Retirements aren’t always smooth sailing. In addition to planning for income needs and building/maintaining your retirement savings, you should also account for potential retirement hazards that, if not dealt with intentionally and carefully, can derail your retirement years.
In recent years, tax rates have been altered, inflation has risen drastically, and the markets have been up and down. There is no telling what the future holds, but knowing what is at risk of occurring can help you and your financial professional safeguard against certain scenarios being detrimental to your ability to retire and stay retired.
A financial professional can guide your decisions for replacing the smaller of your two Social Security incomes if one spouse passes. When necessary, they can facilitate the conversion of pre-tax accounts into post-tax accounts where future gains will be tax-free, avoiding the potential for rising tax rates. Professionals can also recommend products that will generate guaranteed lifetime income, allowing for more peace of mind with what the future could hold.
To schedule a complimentary financial review with Moore’s Wealth Management, click here or call our office at 770-535-5000, where a staff member is awaiting your call Monday through Friday, 9 AM to 5 PM.
Sources:
[1] https://www.census.gov/library/stories/2023/11/world-population-estimated-eight-billion.html
[2] https://www.kiplinger.com/retirement/steps-to-make-money-last-in-retirement
All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed. This material is provided as a courtesy and for educational purposes only.
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
Diversification does not assure a profit or protect against loss in a declining market. All investing involves risk including possible loss of principal.
Conversions from a pre-tax account to a post-tax account may not be suitable for everyone. Withdrawals from a pre-tax account are subject to ordinary income tax and prior to age 59 1/2 may be subject to a 10% federal tax penalty. Conversions to a post-tax account require a 5-year holding period before earnings can be withdrawn tax-free, and subsequent conversions will require their own 5-year holding period. Converting a pre-tax account into a post-tax account has tax implications. Investors should consult a tax advisor before deciding to complete a conversion.
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