Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Retirement should be about reducing stress. In order to do this we need to evaluate those things that “could happen” and develop strategies for dealing with them. At a minimum this will mean maintaining proper insurance coverage on your auto and home. It well might mean purchasing life insurance for the specific purpose of creating a legacy for those you love. If you do that you can spend your assets without any thought of conserving them for your heirs.
The most pressing risk according to surveys is the risk of living too long. None of us wants to run out of money. The possibility of living a long time in retirement is quite high. Imbedded in this risk is the likelihood of a needing medical care and custodial care.
Another risk is the result of the economy. It could go through major shifts and investments might have a period of decline that could jeopardize your retirement. At that point it is unlikely that you would be able to do anything about it as our ability to work diminishes with every passing year.
Another risk that we face is that we could lose our spouse. This is inevitable but it could come sooner rather than later and that could have a profound impact on available money and support. Widows are often faced with very tough economic realities.
Long term care requirements are the number one reason why a wealthier person would run out of assets in retirement. There are several strategies to address this risk including long term care insurance.
There are several things a person can do to increase their income in retirement. One of the most significant things is to carefully select the date when social security and pension benefits start. The social security benefits increase the longer a worker waits up to the age of 70. This increases the benefit to a widow as well, should the worker die first.
People often own a home. The value of a home minus the mortgage is known as “home equity.” This home equity can be used to derive income. A reverse mortgage can be put in place that will allow a person to remain in their home and yet withdraw loans against the home for income in retirement.
The need for tax planning certainly doesn’t end at retirement. There are tax-saving decisions available that will expand income. Your assets are not all taxed in the same way and by converting assets to income in a tax wise manner can save a great deal and expand spendable income in retirement.
In all strategies there are trade-offs. If you take a reverse mortgage on the home the amount you can leave your children declines. There will be years in which medical expenses will greatly reduce your taxable income. A Roth IRA provides income that isn’t subject to tax which could be a benefit to keep your income in a lower income tax rate bracket.
One of the things that I think is most important in developing strategies for retirement is to establish decision points. These are dates or times when you and your spouse or perhaps including your children decide on where you will live, who will provide care if necessary, what assets can be gifted and other important decisions. I am getting ready for one of those conferences even as I write this. It is important to make decisions before there is a crisis.
A widow told me a few days ago that moving out of her home into a “down-sized” facility was one of the most difficult tasks she had ever performed. The emotional and physical toll was enormous. She had planned to make the move several years in the future and she is convinced that she would hot have been able to make the decision, let along, and make the move at that later date. Decide now when you will downsize. Decide now who will assist you or when you will begin to get outside help. There are so many decisions and it is always best to make them before it is absolutely necessary. These decisions can have a profound effect on insuring the financial success of your retirement.
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The most pressing risk according to surveys is the risk of living too long. None of us wants to run out of money. The possibility of living a long time in retirement is quite high. Imbedded in this risk is the likelihood of a needing medical care and custodial care.
Another risk is the result of the economy. It could go through major shifts and investments might have a period of decline that could jeopardize your retirement. At that point it is unlikely that you would be able to do anything about it as our ability to work diminishes with every passing year.
Another risk that we face is that we could lose our spouse. This is inevitable but it could come sooner rather than later and that could have a profound impact on available money and support. Widows are often faced with very tough economic realities.
Long term care requirements are the number one reason why a wealthier person would run out of assets in retirement. There are several strategies to address this risk including long term care insurance.
There are several things a person can do to increase their income in retirement. One of the most significant things is to carefully select the date when social security and pension benefits start. The social security benefits increase the longer a worker waits up to the age of 70. This increases the benefit to a widow as well, should the worker die first.
People often own a home. The value of a home minus the mortgage is known as “home equity.” This home equity can be used to derive income. A reverse mortgage can be put in place that will allow a person to remain in their home and yet withdraw loans against the home for income in retirement.
The need for tax planning certainly doesn’t end at retirement. There are tax-saving decisions available that will expand income. Your assets are not all taxed in the same way and by converting assets to income in a tax wise manner can save a great deal and expand spendable income in retirement.
In all strategies there are trade-offs. If you take a reverse mortgage on the home the amount you can leave your children declines. There will be years in which medical expenses will greatly reduce your taxable income. A Roth IRA provides income that isn’t subject to tax which could be a benefit to keep your income in a lower income tax rate bracket.
One of the things that I think is most important in developing strategies for retirement is to establish decision points. These are dates or times when you and your spouse or perhaps including your children decide on where you will live, who will provide care if necessary, what assets can be gifted and other important decisions. I am getting ready for one of those conferences even as I write this. It is important to make decisions before there is a crisis.
A widow told me a few days ago that moving out of her home into a “down-sized” facility was one of the most difficult tasks she had ever performed. The emotional and physical toll was enormous. She had planned to make the move several years in the future and she is convinced that she would hot have been able to make the decision, let along, and make the move at that later date. Decide now when you will downsize. Decide now who will assist you or when you will begin to get outside help. There are so many decisions and it is always best to make them before it is absolutely necessary. These decisions can have a profound effect on insuring the financial success of your retirement.