Let’s face it: Most folks don’t have the time or expertise to prepare and manage a comprehensive retirement plan. The problem is that anyone can call themselves an “expert.” When you hire a Registered Investment Advisor (RIA), you get more than expertise. You’re getting a fiduciary obligated legally to work in your best interests. We have no hidden agendas or conflicts of interest, just straight-up, honest advice that seeks to build and protect your wealth.

Retirement planning should start early. Due to compound interest and returns, the ability to explore more investment options, and the chance your money has more time to respond to market fluctuations, the sooner you start saving, the more your retirement nest egg likely grows. An early start provides the flexibility to adjust your strategy and gives you more time to recover when markets turn down. 

An RIA can help create and achieve a personalized retirement plan. It’s a multifaceted task that must address several important questions, including:

• When can you retire, and when should you? We’ll show you how to formulate answers.
• How much money will you need to retire, and where will it come from? You need enough income to ensure you don’t outlive your money.
• How will you diversify your investments? By allocating your money to a wide array of assets beyond stocks (such as real estate, fixed-income securities, etc.), you can potentially reduce the risk that all your investments will go down simultaneously.
• How will your plan allow for portfolio adjustments when needed to protect your savings and meet your goals? Changes in inflation and interest rates may require a defensive posture.
• How to arrange retirement income for maximum tax efficiency? Your plan should optimize the sourcing and sequencing of your income streams.
• How will your advisor incorporate your goals for legacy planning and charitable giving?

We have the answers to these questions. More importantly, our solutions always reflect our commitment to your best interests.

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Retirement Planning: Will Social Security Go Broke?

Why ‘Set It and Forget It ‘May Be the Wrong Investment Strategy

Understanding Social Security

A recent National Institute on Retirement Security survey reported that more than half of the respondents felt financially insecure about retirement. A common underlying fear is that you’ll outlive your money, an ironic outcome if you’ve enjoyed a healthy life (or inherited good genes) and expect to live a long time.

Three threats to your retirement lifestyle are inflation, negative cash flow, and market volatility. Each has the potential to reduce your retirement nest egg faster than anticipated. But you, and your financial advisor, can fight back. 

The first step is to keep track of your assets and how they are deployed. Your personalized retirement plan should describe your optimal asset allocations based on your circumstances. For example, you may need to increase your income-generating investments to beef up your cash flow. 

Two feasible and complementary options are to keep earning money during retirement while spending less. Part-time work from home is easier than ever, and even a little extra income can make a big difference. You can tighten your budget on the spending side, but you can also fundamentally alter it by downsizing, relocating, and selling off expensive assets. 

If you are not yet at retirement age, it’s a good idea to maximize your savings, starting with tax-friendly retirement accounts. The more you can save and invest now, the more money you’ll have for the retirement lifestyle you desire.

Additional Reading: 

We’re Afraid of Running Out of Money During Retirement

Historically, the Federal Reserve has raised interest rates to respond to inflation. In the last year, we’ve seen a startling increase in inflation, causing the Fed to raise interest rates at a pace seen only a few times in history. On the plus side, bonds and cash are yielding more income. However, inflation has eroded the value of your money by pushing prices higher and wages have not kept pace

You can rebalance your 401(k) to address these competing outcomes with capital appreciation strategies. For example, prices of issued bonds drop when prevailing interest rates rise. This creates the potential for capital gains when you buy bonds at a discount and hold them until maturity, when you’ll receive the full face value. Until then, you’ll benefit from higher interest income. 

Moving some 401(k) equity investments to cash and short- to intermediate-term bonds is another response to a rising interest rate. You don’t want to hoard cash because it doesn’t keep up with inflation. Keep enough money on hand to fund about six months of expenses. You can invest excess cash in securities that benefit from higher inflation.

Another way to benefit from rising interest rates is to invest for tomorrow by buying a low-cost annuity from an insurance company. As rates rise, new annuity policies offer higher payments, providing additional money for your retirement.

When your annuity reaches its annuitization date, you can start taking periodic payments or accept a single lump sum. But high interest rates equate to a smaller lump sum because the issuer’s liability moves opposite to interest rates. Your advisor can show you how to take your payout for maximum benefit.

We strongly believe it makes sense to adjust your portfolio for rising interest rates but in a calm, rational way. An experienced advisor will help you avoid panic-induced mistakes.

More on the subject here: 

How Interest Rate Changes REALLY Impact Retirement

Concerned About Safeguarding Your Financial Legacy? Let Our Experience Be Your Advantage

As we’ve indicated, inflation threatens the purchasing power of your retirement income. But it also provides opportunities to increase that income through intelligent responses. Your income strategy should consider several actions, including:

• Converting part of your 401(k) to a Roth 401K or ROTH IRA while still working. You’ll pay more taxes now but increase your tax-free income in retirement. 
• Diversifying investments to accommodate changes in the inflation rate (up or down). Spreading your wealth across a wide array of assets and strategies can reduce overall volatility since it’s unlikely that all investments will decline at the same time.
• Tapping retirement sources in the correct sequence to maximize after-tax cash flows. For example, you will probably want to postpone Social Security benefits and the extra taxes they trigger for high-net-worth individuals (the so-called Social Security tax bullet). 
• Expanding investments in low cost, no broker required annuity products to lock in risk-free, tax-friendly income.
• Creating trusts to reduce taxes now and after your death through an optimized estate plan.

Read more here: 

Inflation is Here: How to Protect Your Retirement 

Retirement Fears, the Economy and the Market

It’s never the wrong time to get a second opinion because it provides an opportunity to ask crucial questions:

• Is your advisor being truthful with you? For example, do they guarantee they’ll beat the market? No one can honestly guarantee that.
• Have you been educated about market cycles and how to prepare for them?
• Do you know how your portfolio is performing?
• Can you say how much you’re paying for financial services?
• Are you experiencing change due to events (for example, relocating) and/or revamped financial goals? 

If you’re wondering how to switch financial advisors, you’re looking for trust, transparency, and support from a solid contender. If you live in Connecticut, or anywhere in the U.S. really, we invite you to contact us to get a second opinion in New Haven. Our firm will put your interests first by taking immediate actions, including:

• Acknowledging in writing our fiduciary role under ERISA and IRS Code rules, including our obligation to avoid conflicts of interest and account-churning.
• Conscientiously providing advice that is honest and complete, not self-serving.
• Explaining how we would rebalance your portfolio and roll over certain assets for maximum benefit. 
• Using trusts that are exclusively in your and your family’s best interests. 

A second opinion may validate your current arrangements. But it may also reveal the need to move to a new financial advisor. We offer a comprehensive guide to show you how to switch advisors.

For more information: 

Switching Financial Advisors: Finding a Pro in Connecticut

The Big Mistake Richard Made Managing His Retirement

Switching Financial Advisors

Our advisory firm is ideally situated to provide high-net-worth investors with holistic retirement planning. Our refined planning process offers the flexibility required for customized solutions that meet your unique needs:

• Setting your goals: Your goals drive the planning process. We’ll review when you (and your spouse, if applicable) want to retire and what type of retirement lifestyle you desire. Your goals will include your commitments to family members, friends, and cherished causes.
• Funding your goals: You require a strategy to create the income flows to match your goals. This means contributing early and consistently to your retirement savings, using the optimal mix of taxable, tax-deferred, and tax-free accounts. Your assets should be widely diversified and appropriated to match your current and future circumstances. HNW investors often require sophisticated vehicles like trusts, family offices, and foundations to supplement their retirement accounts.
• Quantifying your cash flow requirements: A prudent plan should address your income needs for 30 years from the day you retire. This requires a budget encompassing lifestyle choices, insurance, taxes, and charitable giving. Budgets require periodic adjustments to account for dynamic events and goals.
• Managing your income streams: After creating a contingency fund, you’ll need to structure your income flows to minimize taxes while protecting against inflation, all at the household level. That means sequencing your income sources to reduce the tax impact, rebalancing as needed, and preventing your money from running out before you do.
• Creating an estate plan: This will help ensure that your assets are distributed as quickly as possible and according to your wishes while providing significant tax benefits.

Additional reading: 

6 Smart Strategies For High Net Worth Retirement Planning 

Personal Finance for High Network Individuals

Retirement Planning in Connecticut

We look forward to hearing from you at your earliest convenience. Whether you’re new to financial planning or already set up, we can help you achieve the retirement you desire. Contact us at Heritage Capital today where you can “Invest for Tomorrow. Live for Today”.

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