Retirement Planning
for People During Retirement

Just because you are retired does not mean there is not planning to do. These days people are finding that they spend more years in retirement than they spent in the workplace. Ongoing financial planning can help those already retired take actions to avoid mistakes during retirement years.

Common mistakes include spending too quickly, so the money does not last or the opposite, not enjoying your hard work and spending too little so you don’t fully enjoy retirement. Often, the realization that there is no earned income will trigger fear-based emotions around investing resulting in poor investment performance. Failure to consider inflation, tax implications and best ways to withdraw cash for spending can result in dire consequences.

If you are retired and want to make sure you make the best decisions so you can continue to enjoy your lifestyle, we can help. We work with many people during their retirement years to help them enjoy their best life.

We work locally with clients at our offices in Northern NJ and Sarasota, FL, but can also serve you no matter where you are based through online video meetings.

The Two Phases of Retirement Planning:
Accumulation and Decumulation

While most financial services firms are focused on the accumulation of assets and building wealth, the focus during retirement needs to be on turning wealth into income. It might involve selling a business or a primary residence. It also could include passing wealth on to children and grandchildren. It may include legacy planning and philanthropic giving. It is a time of reflection and recalibrating purpose.

We’ll Help You Answer Your Top Retirement Questions During Retirement

We have worked with dozens of clients to help them gain clarity while in retirement. We can help answer many of your most important questions, including:

Can I continue to spend the same amount that I spent when I was working?
How do I withdraw income from my portfolio in the most tax-efficient manner?
How do I create an asset allocation that keeps ahead of inflation and taxes?
What techniques can I use to preserve capital?
Can I manage my income to avoid Income Related Monthly Adjustment Amounts (IRMAA), which are increased Medicare premiums?
Should I be concerned about estate taxes and how can I minimize taxes incurred by my heirs?
Can I reduce my Required Minimum Distributions (RMDs) to improve my tax situation?
Are there steps I can take to better prepare for a situation where either my spouse or I survive the other?
How much income can I expect to live off in retirement?
What pitfalls exist in claiming Medicare?
How should my investments be structured or restructured to help generate income more safely?
How much cash should I keep on hand?
Should I consider Roth conversions?
What happens if we experience a severe bear market while I am retired?
How much can I gift my children?

Retirement Income Management

Upon your retirement, earned income must be replaced by various sources of income such as Social Security, defined benefit plans (aka pensions), defined contribution plans (aka 401k or 403b), and personal savings. The move away from defined benefit plans, where the employer takes the risk, to 401(k) plans means that individuals need to make their own decisions about how to allocate retirement savings and strategies to generate retirement income.

Research has shown that retirees are more reliant on their personal savings than ever before. This is complicated by the fact that people today are living longer and could face significantly higher healthcare costs in retirement than members of previous generations. Retirees are finding they require retirement income management.

Retirement income management is about making sure your retirement savings are set up to provide enough income for your needs, and that you do not outlive your assets. This includes setting up and managing a portfolio with an overlaying withdrawal strategy to supplement other income sources. To create a “paycheck substitution,” it is important to consider your overall goals in retirement, your marginal tax bracket, your Medicare bracket, inflation, and your expected lifetime.

There are three primary components to developing a distribution or income strategy:

1. Establish a less volatile portfolio (an all-weather strategy), allowing cash withdrawals despite the economic environment.

Years ago, it made sense to protect your nest age by putting your savings into a bond ladder or a low-risk strategy such as an annuity. The problem with this strategy is it will not keep ahead of inflation and taxes.

In recent years, it has become clear that a longevity strategy may be more appropriate, as the retiree’s primary risk may now be outliving his or her capital.
The longevity strategy calls for maintaining equity exposure to help keep pace with inflation,
but that does not mean simply including high volatility stock. A responsible asset allocation should include alternatives to bonds and stocks to reduce volatility but provide greater opportunities for growth. We use S.M.A.R.T.™ statistical modeling techniques to do this.

2. Determine the right withdrawal amount to distribute every month as the “paycheck substitute”.

Once a S.M.A.R.T.™ portfolio is created, a cash withdrawal strategy can be employed. Two common techniques are:

Constant dollar amount based on the initial dollar — usually based upon current spending (increased for inflation).
Constant percentage amount. For example, the 4% rule based on outdated research, recently shown to be an inadequate rule of thumb.

Our personalized approach allows us to develop an optimum paycheck amount for your needs. We allow for a changing amount based upon the overall success rate of your comprehensive plan. We conduct annual reviews to ensure the integrity of your plan, protecting the downside while also providing upside opportunities when things go well.

3. Create a strategy for efficient and timely conversion of securities to cash required for distribution as the paycheck.

Again, there are several different techniques. A systematic withdrawal approach is based on having a diverse portfolio of asset classes (the all-weather strategy) that is regularly rebalanced. Using this strategy, we maintain a cash cushion replenished by dividends, interest from bonds, appreciation, and the rebalancing mechanics to prevent having to sell a security when underperforming (thus locking in the loss). During down markets incorporating a bucket or segmentation supports the withdrawal strategy while remaining invested for long-term goals.

Retirement Advisors Who Put You First

As fee-only fiduciary advisors, we’ve built our business on a service model that puts clients first and avoids all conflicts of interest. In fact we are obligated by law and oath to recommend only strategies that we believe are ideal for your unique situation.

Unfortunately, this is not the case for the majority of advisors. Financial brokers are not required to act as fiduciaries and their advice can be conflicted by financial incentives to steer you towards particular investment vehicles.

If you’d like to work with a retirement planner who you can trust to always act in your best interest, you’ve come to the right place. As your independent fiduciary our only goal is to help you live your best life and obtain the retirement you deserve.

If you’re based in Sarasota, FL or Northern NJ, we’d love to meet with you in our office and see if we’re a good fit. If you’re based elsewhere, as many of our clients are, we’re happy to meet virtually with you to discuss your unique situation.