Navigating the Critical Planning Events Before and After Retirement

How you plan and invest before you retire is different than how you plan and invest in your retirement years. Recently, Certified Financial Planners Angie Thomas and Adam Heathcote presented a webinar covering the five key areas you need to consider as you prepare for, enter into and live in retirement.

In each of the five areas, Adam and Angie talk about when you are in accumulation mode and decumulation mode. Accumulation mode is the time leading up to retirement while you are working and you are increasing your assets in a continuous or repeated way. Decumulation happens when you are converting the assets you saved during your working years into income and spending during retirement.

  1. Financial planning

  • Accumulation mode: Save smart by creating a budget and paying yourself first. Savings should increase as your salary increases with a mix of pre- and post-tax investments.
  • Decumulation mode: Create a paycheck by looking at your various sources of income, from Social Security, pensions, required minimum distributions and assets, taking into account tax considerations and timing of asset liquidation.
  1. Investments

  • Accumulation mode: Save, save, save! The earlier you start a disciplined approach to saving, the better off you will be exponentially. In this mode, you are investing for growth and accepting of the inevitable ups and downs of the market
  • Decumulation mode: You need to look at where your assets are located and create an appropriate mix for longer and shorter term needs, taking into consideration tax minimization, succession planning and liquidity.
  1. Tax planning

  • Accumulation mode: it is all about tax deferral in this mode, doing what you can to minimize the amount of taxes you are paying on your income.
  • Decumulation mode: In this mode, planning is more complex, and you need to look at your income vs. capital gains and have a good strategy for how you will withdraw your funds accordingly.
  1. Risk management

  • Accumulation mode: Identify what coverage you need to replace your income and regularly review the policies you have in place to make sure they are providing adequate coverage.
  • Decumulation mode: Review and repurpose existing policies where needed, with an eye toward long term care costs and wealth transfer to your estate beneficiaries.
  1. Estate planning

  • Accumulation mode: Make sure your basic documents are in order: your will, power of attorney and health care directive, guardianship for your children, etc.
  • Decumulation mode: Look at ways to minimize estate taxes, charitable giving, gifting and more, as well as a regular review of your existing legal documents, such as your will and health care directives.

Want to hear more about what Angie and Adam covered? Start here to learn how to navigate some of the best years of your life.

CATEGORIES: Featured | Wealth Management
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