NEWS & RESOURCES

Authored by: Bradi Dahmen – Director of Wealth Management

It’s never too early to start planning for retirement, and seeking the advice of a financial advisor can help you develop strategies to achieve your financial goals both now and in the future. A comprehensive plan can help you accumulate wealth, minimize tax liabilities and make sound financial decisions throughout your life.

Think of your life in stages, and you will realize that the financial decisions you made at 20 will not be the same as the ones you make at 50 or 70. Your financial plan should be adaptable and evolving, just like you and your family. By planning ahead and understanding your goals, you can make the most of your retirement and enjoy all the opportunities it offers.

Young Adult Phase 20+
In this stage of the game, it’s all about establishing a good credit history, eliminating debt and creating a safety net. Investing in a retirement account (especially if your employer is willing to match your contributions) is also ideal but not the first step in getting your finances in order. Focus on paying off any high-interest rate debt and keeping it paid off as the first step, followed by establishing an emergency fund. Then you can begin focusing more heavily on your long-term financial goals.

Starting a Family Phase 30+
In this phase, planning for retirement becomes more critical. Expenses may grow as your family grows, and your cash flow could affect savings accumulation in your retirement accounts. Consider talking to a financial advisor about creating a comprehensive financial plan during this stage. As your finances become more complex, they can help identify the proper asset allocation, plan for college expenses for your children and other family needs to identify ways to potentially accumulate wealth more effectively.

Peak Earning Phase 40+
You will likely be at the peak of your career-earning years in this phase. Maximizing this increased earning potential is essential by getting aggressive in paying off debts (i.e., outstanding mortgage debt, car loans, credit cards, etc.) and increasing the percentage of your salary that goes into your retirement funds. In addition, this increased income can help you save an amount closer to the higher annual limits on retirement accounts. By now, you should be exploring what retirement goals you have for your family so you can start planning how much income you will need to support your lifestyle during retirement. A financial advisor can help you understand what retirement looks like based on your current financial situation, strategize ways to help fill any gaps and add additional safeguards to protect your wealth and your family.

Nearing Retirement Phase 45-55+
Typically, individuals in this phase will max out their working years at age 65, give or take a few years. At this point, it is equally essential to consider other factors that could impact your retirement. For instance, how will taxation affect your retirement income? Will you need long-term care benefits? You should also reassess the amount you have saved for retirement and determine if you need to increase your savings rate or alter your investment strategies to achieve your retirement goals. A tax-smart financial advisor who actively collaborates with an accountant is crucial in this phase so that you can adequately evaluate your savings and receive advice on pivoting if necessary.

Enjoying Retirement Phase 50-60+
You’ve reached a significant milestone and can even reinvent yourself — whether that means travel, enjoying time spent with family and on hobbies, or even exploring new careers. However, do not forget that to guarantee a prolonged retirement, it is necessary to balance your annual spending with your expected lifespan and the money you have saved up. This is a critical time to make sound financial decisions when it comes to withdrawing income and benefits. At this stage, it’s essential to review your tax planning and income sources like social security, IRA withdrawals, stock dividends and real estate assets.

Estate Planning 70+
Estate planning is the most critical stage in retirement planning. During this final phase, retirement planning shifts into advance planning and making decisions should go beyond maximizing assets. You’ll need to consider how to minimize estate taxes, create a comprehensive estate plan, and decide how your assets will be distributed among your beneficiaries if you have not already. If you don’t have a will or updated estate plan, now is the right time to get everything sorted out.

Taxes can erode a lot of the money you accumulate during the retirement and wealth transfer stages. Working with a financial advisor can who understands the tax landscape can help you strategize ways to maximize your gifts to charities and loved ones with tax-focused solutions to help them benefit more significantly from your gifts.

Planning for retirement is a never-ending process that changes as we grow through life. Everyone’s ideas around retirement will differ, but with careful planning and knowledgeable decision-making, there is no reason to fall into a state of worry or fear. Remember, it’s never too early or too late to start planning. Start today because your future self will thank you for it!