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Estate Planning: Creating a Legacy and Protecting Your Assets
NewsEstate planning may not typically rank high on your priority list, but it is crucial to create a plan for the benefit of your family’s future and your peace of mind. Continue reading below to discover how to safeguard your assets while leaving a lasting legacy.
Understanding The Importance of Estate Planning
Estate planning is a crucial aspect of retirement planning as it allows retirees to set a blueprint for the distribution of their assets after their passing. Without an estate plan in place, retirees risk leaving their loved ones without clear instructions on how to handle their estate. This can lead to confusion, disputes, and potentially costly legal battles.
By creating an estate plan, you can help ensure that your assets are distributed according to your wishes, minimizing the likelihood of family conflict. Before consulting with an Attorney or Fiduciary advisor to start your estate plan, take some time to reflect on your posthumous wishes, as well as some critical questions and scenarios, including:
Although it may be challenging to initiate, discussing your intentions with your loved ones in advance allows you to convey your wishes clearly and provides an opportunity for everyone to ask questions or express their concerns.
Creating Your Estate Plan
In addition to a will, an estate plan may involve various documents that reflect a person’s unique circumstances, such as Living Trusts or Power of Attorney. These complexities can be addressed by your Fiduciary advisor, who can assist in helping to ensure that all necessary documents are properly completed, witnessed, signed, filed, and stored in accordance with state laws.
The following items are some of the most common documents that can be included in an estate plan:
Trusts
A trust outlines precisely how and when your assets will be distributed after your demise, and it can also serve to reduce taxes, bypass probate, and identify the person responsible for caring for your minor children in the event of your passing. Often, individuals use trust in conjunction with a will. The primary distinction between a trust and a will is that a trust circumvents the probate process of transferring property from you to your beneficiaries. The following are two of the most common types of trusts:
Both types of trusts offer unique advantages and disadvantages, depending on your circumstances and estate planning goals.
Powers of Attorney
In addition to planning for the distribution of your assets, it is also essential to plan for situations where you cannot make decisions for yourself. There are several different Power of Attorney (POA) appointed tasks that you should consider, including:
Your health care power of attorney and living will are often referred to as “advance directives,” “health care directives,” or “medical directives.” These documents can be incredibly beneficial in end-of-life situations and serious medical conditions, which can understandably be emotionally challenging for your loved ones.
By including these documents in your estate plan, you can help minimize the stress and anxiety your family members will experience.
Regularly Reviewing Your Estate Plan
As life changes, so will your estate plan. It’s paramount to periodically review your estate plan to ensure that everything is current and meets your requirements. Here are some factors to consider when it’s time to update your estate plan:
Apart from reviewing your trusts and power of attorney, it’s also important to verify that the designated beneficiaries for your life insurance policies, retirement plans, and bank accounts are appropriate.
Minimize Income, Gift and Estate Taxes
Estate planning and tax planning go hand-in-hand. Estate tax planning attempts to reduce potential estate tax liability by utilizing planning techniques to reduce either the amount of property in the taxable estate, or to minimize the valuation of the property in the taxable estate. Some strategies to include:
tax liability. (Up to $17,000 per beneficiary in 2023).
How a Fiduciary Advisor Can Help
A Fiduciary advisor can be a valuable resource when it comes to planning your estate, especially for those who may have complex financial and personal circumstances to consider. A Fiduciary advisor is held to the highest ethical standard and is legally required to act in the best interest of their clients.
At Agemy Financial Strategies, our Fiduciary Advisors can help you navigate the intricacies of estate planning. This includes crafting a comprehensive plan for the distribution of assets, minimizing tax liability, and identifying the right type of trust to suit your needs. If you have more questions about our estate planning services, see here.
Working With Agemy Financial Strategies
Without an estate plan in place, your heirs could face big tax burdens and the courts could designate how your assets are divided.
When it comes to creating your estate plan, having a retirement income advisor that you trust is crucial to your planning success. At Agemy Financial Strategies, we have over 30 years of estate planning experience to guide you through the entire process.
While a proper estate plan will not enable you to avoid death, it can help eliminate, or at the very least, minimize estate taxes. Our experienced estate planning advisors will assess your assets, listen to your concerns and recommend an approach that is most likely to safeguard your estate for future generations.
If you’re ready to get started on your estate planning, set up a complimentary consultation here today.
Retire Confidently with Agemy Financial Strategies
NewsThe unpredictability of financial markets can disrupt even the best-laid retirement plans. This Financial Literacy month, let’s take some time to reflect on the importance of retirement planning with confidence amid financial turmoil.
Retirement should be about spending time with those you love, enjoying the perks of free time, and having the money you need to achieve all of your retirement goals and dreams. However, the last few years may have felt like that dream is being ripped away from you as we go through yet another rollercoaster in the financial world.
Unfortunately, retirees and those planning to retire soon are the people most threatened by high inflation and extremely rocky financial markets. Fortunately, planning ahead can go a long way toward helping you protect your retirement when market volatility and worry hits.
At Agemy Financial Strategies, we understand that retirement planning can be intimidating in 2023. To help you retire with confidence, we have compiled a series of retirement planning strategies for both newly retired individuals and those who wish to refine their current plans. This will help allow you to approach the retirement process with a brighter outlook.
Here’s what you need to know.
Define Your Retirement Goals
When it comes to retirement planning, defining your goals is a crucial first step. Retirement can mean different things to different people, so it’s necessary to think about what you want your retirement to look like.
For some, it may involve traveling to new places, pursuing hobbies and new interests, or spending time with family and friends. Some people may choose to work during their retirement years, while others may have different plans. Whatever your plans are, it’s crucial to have a clear comprehension of your goals for retirement.
Once you have a clear idea of your retirement goals, you can begin creating a plan to help you achieve them. This plan should take into account a variety of factors such as:
Planning for retirement is an essential component of financial literacy. When you define your retirement objectives and chart a course of action, you make significant strides toward accomplishing a successful retirement.
Invest Wisely
As the financial world evolves, we understand investing can be overwhelming. But it is an excellent source to help grow your money – and let it work for you in your golden years.
The primary objective of investing is to achieve high returns, but with higher returns come higher risks. In order to optimize your returns and minimize potential risks, it’s crucial to diversify your investment portfolio. Your investment strategy should be determined by several factors, such as:
By carefully considering these variables, you can determine the best investment strategy for your retirement savings. It’s important to remember that investments are not one-size-fits-all, and what may work for one person may not work for another.
Around 60% of households in the U.S. own securities in investments on accounts such as IRAs, and employer-sponsored retirement plans. However, this percentage drops to a little over 30% when considering only taxable investments.
It’s essential to take the time to research different investment options and consult with a Fiduciary Advisor if necessary to make informed investment decisions that align with your retirement goals.
Monitor Your Progress
Monitoring your retirement savings progress enables you to make necessary adjustments to your investment strategy, ensuring that you’re on track to achieve your retirement goals. You should check your retirement savings at least once a year, and more frequently if you have made significant changes to your financial situation or investment strategy.
Regularly monitoring your retirement savings also helps you identify potential issues early on, such as unexpected expenses or market volatility. If you are aware of these issues, you can take proactive measures to tackle them, such as modifying your savings rate or rebalancing your portfolio.
Additionally, keeping tabs on your retirement savings progress can motivate you to stay on track and increase your savings rate if needed.
Factor in Emergencies
Life emergencies happen. And they happen a lot. We’re not just talking about your car breaking down. A fender bender, an unexpected medical bill, a broken appliance, a loss of income, or even a damaged cell phone. Large or small, these unplanned expenses often feel like they hit at the worst times. By setting up a dedicated emergency fund, you can help protect yourself from chipping into your savings so you’re able to recover quicker and get back on track towards reaching your larger savings goals.
Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months’ worth of living expenses. But it’s not unwise to save more during times of uncertainty. Building up your emergency fund can help prepare you and set your mind at ease if the unexpected should occur.
Plan for Long-Term Care
If you’ve not planned correctly, perhaps one of the biggest financial setbacks to retirees is long-term care. 70% of us will need long-term care, and it’s not cheap. An average room in an assisted living facility in 2023 will set you back around $5000 per month.
In 2023 without insurance, monthly long-term care costs could see you paying:
Medicare does not pay for most long-term care expenses because it is primarily designed to cover acute care services for short-term illnesses and injuries. To cover the cost of long-term care, many individuals opt for private long-term care insurance, Medicaid, or a combination of both.
With the likelihood of needing long-term care increasing with age, it’s crucial to consider this aspect in your overall retirement plan. By taking a comprehensive approach to planning for healthcare costs, you can help ensure you have the resources necessary to pay for the level of care you may require in the future.
Consider Working with a Fiduciary Advisor
If you are worried about your road to retirement, working with a Fiduciary Advisor can provide invaluable guidance and expertise in retirement planning. A Fiduciary Advisor can help you develop a personalized retirement plan, optimize your investment strategy, and stay on track to achieve your goals.
At Agemy Financial Strategies we are committed to educating our clients on a range of financial matters, including retirement planning, legacy planning, wealth management, and even providing support during the transition to retirement. With over 30 years of experience in helping individuals reach retirement in a stress-free manner, our unwavering dedication to educating and serving our clients remains at the core of our mission.
If you’re interested in learning more about our offerings, see here.
Final Thoughts
While it can be stressful to see headlines about threats to the value of your nest egg, a volatile market does not necessarily mean danger for your retirement plans.
At Agemy Financial Strategies, we believe that everyone deserves financial stability and freedom, especially during retirement. We’re passionate about helping our clients achieve their retirement goals, and our commitment to providing resources and guidance is a testament to that.
Our financial guide to retirement planning is just one of the many tools we offer to help you take control of your finances and plan for the future. Don’t wait any longer to start planning for your retirement.
Contact us today to learn more about how we can help you achieve financial security and peace of mind.
Tax Secrets the IRS Won’t Tell You… But We Will
NewsTaxes – they’re a fact of life. Whether you love them or loathe them, they’re essential to living in a modern society. But navigating the murky waters of tax laws and regulations can often feel like deciphering a cryptic code. Read on to discover strategies to help mitigate the effects of taxes on your nest egg this filing season.
In the fiscal year of 2023, the IRS processed more than 160 million federal individual tax returns and supplemental documents. However, despite the abundance of information the IRS provides on how to file your taxes correctly, certain lesser-known secrets could save you money or protect you from trouble. In this blog, we’ll shed light on some of these tax secrets that the IRS might not readily disclose.
The IRS is strict about Americans paying their taxes on time. If you’re even a day late with a payment, you can expect penalties and possibly fines added to what you owe. This applies even if you disagree with the amounts on your tax return. For example, if you finish your tax return but don’t understand why some deductions were denied, you still have to pay the amount listed as owed.
If you complete your tax return but find certain deductions disallowed, you’re still obligated to remit the amount stated as owed on your return. Afterward, you can consult with the IRS to contest the disallowed deductions, and they may even issue a refund if deemed appropriate. However, if you don’t file your return by the due date, you’ll get hit with a penalty of 5% for every month it’s late, up to 25%. The bottom line? You must file your tax return on time, even if you don’t agree with the outcome.
2. You May Have To Find Deductions and Credits on Your Own
Understanding the nuances between tax credits and tax deductions is essential for maximizing your tax savings. Tax deductions lower your taxable income by subtracting eligible expenses or contributions from your total income. The IRS provides the standard deduction amount on your tax form:
Tax credits can result in substantial savings, as they directly reduce your tax liability rather than just lowering your taxable income. Various credits are available, such as the retirement saver’s credit, mortgage insurance premiums, and the earned income tax credit, which you could be eligible for.
Understanding the distinctions between tax credits and deductions can help you spot opportunities to leverage these tax benefits and retain more of your money. Consulting with a financial advisor can provide valuable guidance if you’re unsure about optimizing your credits and deductions.
3. Utilize Tax-Advantaged Retirement Accounts
Utilizing tax-advantaged accounts is a smart strategy for minimizing your tax burden while saving for future expenses. One key aspect of retirement planning is understanding the contribution limits for retirement accounts such as 401(k)s and IRAs. These limits determine how much you can contribute to these accounts each year, helping you build a robust nest egg for retirement.
Let’s take a look at the expected contribution limits for 2024:
It’s essential to consult with a financial advisor or check the latest IRS guidelines to confirm these limits for 2024 and adjust your retirement savings strategy accordingly.
5. Explore Other Savings Options
While traditional IRAs and 401(k)s are well-known options, several other tax-advantaged accounts are worth considering. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are particularly beneficial for managing medical expenses. With an HSA, you can contribute pre-tax dollars to cover qualified medical expenses, such as doctor visits, prescriptions, and over-the-counter items. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free, making it a triple tax-advantaged account.
Similarly, FSAs allow you to set aside pre-tax dollars to cover eligible medical expenses, offering immediate tax savings on qualified healthcare costs. Exploring these tax-advantaged account options can lead to significant tax savings while helping you achieve your financial goals, whether saving for retirement or managing healthcare costs. Strategically utilizing these accounts can help you maximize your tax efficiency and keep more of your hard-earned money in your pocket.
Understanding tax strategies and managing your tax bill should be part of any sound financial approach. Some taxes can be deferred, and others can be managed through tax-efficient investing. With careful and consistent preparation, a financial advisor can help you manage the impact of taxes on your financial efforts.
This is where working with a fiduciary advisor can prove immensely beneficial. Fiduciary advisors offer personalized financial strategies to help manage the impact of taxes on your financial efforts. What’s more, as a fiduciary and Registered Investment Advisor, you can be confident Agemy advisors will recommend only what is in your best interest.
From tax planning and legacy planning to wealth management and estate planning, we provide the guidance and support needed to navigate every stage of your financial journey, including the transition into retirement. With years of experience and a personalized approach, you can confidently chart a course toward a secure and prosperous future.
Final Thoughts
While the IRS provides plenty of guidance on fulfilling your tax obligations, there are still many secrets and strategies that can help you save money and avoid trouble. By understanding the ins-and-outs of the tax code and leveraging lesser-known techniques, you can help make the most of your tax filing.
At Agemy Financial Strategies, we are committed to educating our clients on various financial matters. With over 30 years of experience in helping individuals reach retirement stress-free, our unwavering dedication to serving our clients remains at the core of our mission.
Contact us today to learn how we can help you this tax season and beyond.
Spring Into Action: HNWI Estate Planning
NewsAs the seasons transition and we look forward to warmer days ahead, change sweeps not only through the natural environment but our financial world, too. For high-net-worth investors, spring signals a prime time to review financial plans, especially when it comes to estate planning.
In the hustle and bustle of everyday life, it’s easy to overlook the importance of estate planning. Yet, reviewing and updating your estate plan can be valuable as the seasons change and new opportunities emerge. It’s a chance to reflect on your financial legacy and make any necessary adjustments to have it align with your current circumstances and goals. Here’s what you need to know.
The Importance of Estate Planning for HNWI
Estate planning is not solely about the transfer of assets after one’s passing. It involves having a comprehensive approach to managing wealth during your lifetime and beyond. Individuals with high net worth have estates that involve complex structures and significant assets. In order to protect these assets, careful planning is needed.
64% of Americans think having a will is very or somewhat important. Surprisingly, among those who emphasize the importance of having a will, one in four individuals still haven’t drafted one. Yet, higher-earning Americans are twice as likely as lower-earning Americans to prioritize drafting a will after expanding their family.
This emphasizes the importance of estate planning for HNWI, as it protects their assets and ensures the protection and distribution of wealth for their growing families. Without proper planning, a substantial portion of an estate’s value could be lost to taxes, diminishing the legacy for beneficiaries. Let’s look at some strategies that can help you optimize your estate plan while maximizing your wealth preservation.
HNWIs can optimize their estate plans to help maximize wealth preservation by implementing strategic measures, such as establishing trusts. Trusts can be powerful tools for achieving financial goals and protecting assets. They offer flexibility, control, and numerous benefits, making them popular among individuals with substantial wealth.
There are various types of trusts, each designed to serve different purposes. Common types include:
Understanding the nuances of different trust structures can empower you to decide which type of trust best aligns with your estate planning objectives. Trusts can help shield your assets from creditors, lawsuits, and other threats. Some trusts allow you to serve as the trustee, maintaining control while enjoying the benefits of asset protection and tax planning.
The federal estate tax ranges from 18% to 40% and generally only applies to assets over $13.61 million in 2024 for individuals. But married couples don’t have to pay estate if their estate is worth $27.22 million or less. For 2023, the threshold is $12.92 million for individuals and $25.84 million for married couples.
It’s important to consult a financial advisor who can help you navigate the complexities of trusts to preserve, protect, and distribute your wealth according to your wishes.
Minimize Gift & Estate Assets
High Net Worth Individuals (HNWIs) can integrate gifting assets strategically into their existing estate plans in various ways. Firstly, they can take advantage of annual gift exclusions, permitting them to gift a set amount per recipient annually without incurring gift taxes. Taxes are a certainty in life, but with careful planning, you can minimize the tax burden on your estate after your passing.
As part of your estate planning journey, it’s crucial to evaluate your total assets, encompassing:
The estate tax threshold, or the exemption limit, is crucial in estate planning. Estates exceeding the current threshold may be subject to federal estate taxes, which can significantly diminish the wealth intended for beneficiaries. Giving gifts to loved ones presents another avenue for reducing the value of your total assets during your lifetime. Notably, you can avoid paying gift tax if your gifts remain below the gift tax limit, which is $18,000 per recipient in 2024. In addition to charitable giving, there exist other avenues for giving that are not subject to gift tax, including:
A comprehensive estate plan evaluates all available strategies and implements those most suitable to your circumstances. Working with a fiduciary can help you find the right strategies based on your needs and goals.
Navigating the complexities of estate planning can require professional help, especially if you have substantial assets to manage and transfer. Your advisor should be familiar with your goals and concerns, your assets and how they are owned, and your family structure, which is where a fiduciary comes into play. A fiduciary is an individual or entity entrusted to act in the best interests of another party, typically concerning financial matters. There are several ways in which a fiduciary can assist HNWI in their estate planning endeavors:
Working with a fiduciary ensures that your estate planning journey is guided by professionalism, integrity, and a commitment to achieving your long-term objectives.
Regularly Review and Update Your Plan
Estate planning can be challenging, especially for those with a high net worth. You want to protect your family, assets, and business and gain peace of mind knowing you’re prepared and in control. Therefore, it’s essential to regularly review and update your estate plan to confirm it remains aligned with your goals and takes advantage of any new tax-saving opportunities.
An experienced fiduciary advisor can provide valuable advice and guidance regarding estate planning. At Agemy Financial Strategies, our team of skilled fiduciaries excel in assisting clients with creating robust estate plans for HNWIs. We are committed to providing our clients with the highest level of service and will work with you every step of the way to confirm that your estate plan needs are taken care of.
Last Thoughts
Spring is a season of renewal and growth, making it ideal for HNWIs to spring into action and revisit their estate planning strategies. By proactively addressing their estate planning needs and enlisting the support of a knowledgeable fiduciary, HNWIs can help protect their wealth for generations to come.
At Agemy Financial Strategies, you can rest assured that your financial affairs are in capable hands. To learn more about how trusts can benefit your estate planning needs, schedule a complimentary strategy session with us today.
The Road to Retirement: Essential Steps for the ‘Peak 65’ Generation
NewsAs Americans approach their mid-sixties, they will encounter a significant milestone known as ‘Peak 65’. This phenomenon can have profound implications for retirement plans.
According to the U.S. Census Bureau’s projections, by 2030, all baby boomers born from 1946 through 1964 will have reached the age of 65 or older. This demographic shift signifies that one in every five Americans will have entered the traditional retirement age bracket. Understanding the impact of ‘Peak 65’ and seeking guidance from a fiduciary can be crucial in helping you move through this phase effectively. Here’s what you need to know.
‘Peak 65’ signifies the age when many individuals contemplate retirement or transition from full-time employment to pursue other interests. As you might have anticipated, the ALI focuses on retirement income, presenting some thought-provoking statistics for those nearing the Peak Zone:
This wave of upcoming retirees is reshaping the retirement planning landscape and also presents the task of protecting wealth for an extended duration. One of the positive aspects of ‘Peak 65’ is that it prompts individuals to reassess their retirement savings, investments, and overall financial readiness for retirement. This demographic shift carries profound implications for the wealth management sector.
As an investor approaching retirement age, your retirement plan must adapt to this new reality to effectively meet the needs of today’s and tomorrow’s retirees. It goes beyond simply having enough to retire; the focus is on sustainable retirement funds, allowing individuals to fulfill their aspirations of leaving behind a meaningful legacy. Let’s explore how wealth management can play a pivotal role in achieving these goals.
Employing A Wealth Preservation Strategy
Financial readiness takes center stage as individuals approach the ‘Peak 65’ milestone. Those nearing retirement must meticulously evaluate their retirement income sources to gauge their readiness for this stage of life. This requires the adoption of a wealth preservation strategy.
While the concept of wealth growth focuses on accumulating more assets, wealth preservation is centered on protecting your wealth against erosion. Various investment strategies are tailored to help secure wealth over the long term. Instead of putting all your eggs in one basket, diversifying your investment portfolio across various asset classes can help spread risk and potentially enhance returns.
Consider a mix of stocks, bonds, real estate, and alternative investments. By embracing a diversified investment approach and incorporating alternative investments toward wealth preservation, individuals can help protect assets from significant declines in value.
Having An Estate Plan
Leaving a lasting financial legacy for children and grandchildren is a key priority for many retirees. As the baby boomer generation ages, they are preparing to pass the torch to the next generation in more ways than one. One crucial aspect of this transition is the astounding $53 trillion in assets that boomers will transfer to their heirs. In order to provide a smooth and efficient wealth transfer, it is imperative to have a well-crafted estate plan.
Effective estate management enables you to manage your affairs during your lifetime and help control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and help ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.
At Agemy, our fiduciary advisors can help you navigate the intricacies of estate planning. This includes crafting a comprehensive plan for the distribution of assets, helping minimize tax liability, and identifying the right type of trust to suit your needs. This brings us to our final step in managing wealth that lasts.
Healthcare and Long-Term Care Considerations
With ‘Peak 65″ comes an increase in people needing long-term care. The cost of long-term care can be substantial, and it’s not covered by traditional health insurance or Medicare. On average, a year in a nursing home can cost around $108,408 per year for a private room.
It’s crucial to remember that nursing home costs vary significantly by location, emphasizing the importance of checking specific rates in your area. The financial commitment associated with long-term care necessitates careful consideration and planning to help ensure both the well-being of your loved ones and your financial stability.
Planning for long-term care needs is essential to help ensure that retirees have the necessary resources to receive the care they require. This can involve creating a financial plan, researching care options, and discussing wishes with loved ones. Ultimately, working with a fiduciary can help you plan for these costs.
Navigating the complexities of retirement planning, especially during ‘Peak 65’, can be daunting. This is where the experience of a fiduciary can be valuable. Working with a fiduciary can be a highly useful tool for Americans transitioning to their golden years. What’s more, fiduciary advisors must act in their client’s best interests, providing objective advice.
At Agemy Financial Strategies, we offer customized retirement planning services so our clients can get sound advice and gain knowledge in the following areas:
At Agemy, our top goal is to empower clients to make informed decisions and confidently navigate the financial landscape’s complexities. Our team takes the time to understand each client’s circumstances and long-term objectives, helping to ensure that your retirement plan aligns with your values and aspirations.
Final Thoughts
As ‘Peak 65’ continues to sweep across the nation, we remain committed to providing the knowledge and direction you need to help manage your wealth effectively while confidently navigating your golden years.
Agemy Financial Strategies is a Connecticut-based financial firm (with offices in Denver, Colorado) that understands the challenges an aging America faces. Our purpose is to educate retirees – whether planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement.
Contact us today to get started on this important journey.
Protect Your Wealth During Retirement
NewsAs you approach retirement, protecting your wealth becomes increasingly important. After all, you’ve spent decades building up your nest egg, and you want to ensure that it lasts as long as you do.
It’s no secret that it’s hard to plan for retirement. In addition to growing a sizeable nest egg, you must protect it from external factors like market volatility, inflation, and unforeseen expenses.
If you’ve amassed a healthy portfolio of assets from years of hard work, how can you guarantee that it will be sufficient to sustain you through retirement and support your family after you pass on? To aid in securing your wealth during your golden years, we’ve outlined some strategies to consider.
Here’s what you need to know.
Be Flexible With Your Withdrawal Strategy
Retirees face a significant risk in the form of inflation, which gradually diminishes the purchasing power of their savings, making it challenging to maintain their lifestyle over time. Although the 4% rule is a helpful starting point for determining the yearly withdrawal amount, it can be an outdated strategy in 2023. This is why a flexible withdrawal strategy is crucial to adapt to the ever-changing market.
In case of unexpected downturns in your portfolio, you may need to curtail your withdrawal increases or even decrease the withdrawals to protect your long-term needs. Your Fiduciary Advisor can collaborate with you to develop a withdrawal plan that adjusts as your retirement progresses.
Take Your Required Minimum Distributions (RMDs)
Once you reach a specific age, you’re obligated to make annual withdrawals of a minimum amount from your tax-deferred retirement accounts, such as the 401(k) and traditional IRA. Failure to do so will result in significant penalties levied by the IRS.
Although you cannot control your Required Minimum Distribution (RMD), you can opt for various methods to allocate the funds. This includes safeguarding other assets or finance expenses, including permanent life insurance. If you require further details on the RMD regulations, you can contact your Fiduciary advisor. The IRS also offers resources for determining your RMD.
It’s important to stay in the loop with changes to RMDs. Recently, the SECURE 2.0 Act has increased the RMD age to 73 for those turning 72 in 2023. Additionally, the penalty for not taking RMDs has been reduced to 25%.
Diversify Your Portfolio
As the adage goes, don’t put all your eggs in one basket. Diversification is the practice of building a portfolio with a variety of investments that have different expected risks and returns. This specific strategy is essential when it comes to protecting your wealth.
While diversification can’t guarantee that your investments won’t suffer if the market drops, it can improve the chances that you won’t lose money, or that if you do, it won’t be as much as if you weren’t diversified.
Reviewing your portfolio with your retirement income planner/Fiduciary a few times each year can help keep your long-term plan on track and ensure you don’t have your goals tied to one or two investments.
Review Your Estate Plan
One crucial aspect of safeguarding your wealth is ensuring that it passes on to the intended recipients once you’re no longer around. To achieve this, it’s vital to regularly assess your estate plan, or if you haven’t already created one, to do so. Your estate plan should include the following:
By staying vigilant and updating your estate plan as needed, you can ensure that your hard-earned wealth is distributed according to your wishes and benefits your loved ones and causes you care about.
As always, it’s best to first consult with your trusted Fiduciary Advisor to evaluate your estate plan and ensure that it meets your needs.
Plan for Healthcare Costs
With longer life spans and medical costs that historically have risen faster than general inflation—particularly for long-term care—managing health care costs is important for retirees. Retirement planning conversations should include a discussion of the impact long-term care costs have on individuals and their family’s future.
The cost of long-term care can be substantial, and it’s not covered by traditional health insurance or Medicare. On average, a year in a nursing home can cost around $100,000, and the cost of in-home care can be just as high.
In 2023 without insurance, monthly long-term care costs could see you paying:
Individuals 65 or older have a 70 percent chance of needing long-term care services in the future, but only 11 percent purchase long-term care insurance. The rest are left scrambling to cover costs when the time comes.
To help fill a gap in saving for health care expenses, make sure you are properly insured and consider increasing contributions to your tax-advantaged accounts, especially HSAs (if you have one). HSAs will help enable tax-free spending on health care in retirement.
Work With Agemy Today
After devoting many years to saving and investing for your retirement, switching from saving to spending that money can be stressful. Ideally, soon-to-be retirees should work with a financial advisor to review their individual savings and investment plans to make sure they’re on track for all their goals.
Working with the advisors at Agemy Financial Strategies can help you get ready for the future and future generations. Because making just a couple adjustments to your financial lifestyle can be greatly beneficial in the long run.
Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.