Retirement Planning

You may have heard of acronyms called “LIFO” and “FIFO” in financial discussions with your advisor or in some other circles. But what exactly do they mean?

LIFO means “Last-In, First-Out” – in other words, the gains or interest earnings in an account are distributed first and subject to taxes. FIFO means “First-In, First-Out,” referring to how your principal, or the original sum of money in the account, would be distributed first and would be taxed.  

While they aren’t common terms, LIFO and FIFO generally come up in discussions around retirement assets or other financial holdings. For example, non-qualified annuities are subject to LIFO for tax purposes, and both LIFO and FIFO can apply to stocks that someone owns, as another example.

This article will look at both FIFO and LIFO and explain the basics of how they work.

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You may be familiar with the Rule of 25x as a method for estimating how much you will need to save for your retirement. But most of us don’t really know what the Rule of 25x is or how it works. Is it still useful in today’s retirement world? 

At its simplest, the Rule of 25x says, if you save 25 times what you would like your annual income in retirement to be, that sum could last for 30 years.

As with every retirement rule, whether it’s the three-legged stool for retirement income or the Rule of 120, the Rule of 25x is imperfect. It’s good to remember these imperfections when using the Rule of 25x for planning your retirement.

This article will examine how the Rule of 25x works, some of its problems, and alternative ways that you can work to ensure that you will have enough lifelong income in retirement.

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When it comes to saving and planning for retirement, there are several mistakes that can be made along the way. To avoid those crucial errors and set the groundwork for a secure retirement, it’s good to think about the future, plan ahead, and check that your financial goals are well-grounded.

To that end, keep in mind these twenty-four common retirement planning mistakes. While this isn’t an exhaustive list, it’s a good starting point, whether your “sayonara” to the workplace is on the horizon or you still have some years to go.

We will go into each of these frequent mistakes in more detail, but here is a quick sum-up:

1. Having no retirement plan
2. Not calculating how much you will need to retire
3. Not knowing how much retirement income you will need
4. Not taking full advantage of retirement plans and accounts
5. Failing to capitalize on an employer match
6. Not increasing retirement savings after a pay raise
7. Neglecting to do annual reviews on your financial progress
8. Not regularly checking beneficiaries on retirement accounts
9. Raiding your qualified retirement plan early
10. Cashing out your retirement accounts
11. Underestimating how long retirement might last and its cost
12. Failing to shift to a more conservative approach near retirement
13. Not talking with your spouse about your personal retirement goals
14. Thinking about retirement only in financial terms
15. Not calculating required minimum distributions
16. Not planning for taxes in retirement
17. Taking Social Security too early (if not right for your situation)
18. Forgetting about inflation in retirement
19. Assuming you won’t work in retirement
20. Thinking that you might be able to work for all of retirement
21. Failing to account for retirement healthcare costs
22. Starting retirement planning way too late
23. Despairing because you started late
24. Retiring too early

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As you near retirement, it’s important to talk to your financial advisor about retirement. While the essentials of retirement planning don’t change, the 2020s have brought some unique conditions: huge market swings in a short time, fast-rising interest rates, and ongoing global economic uncertainty. For 2024, here are a few questions to ask your financial advisor about retirement. After all, you need to know that your advisor can competently guide you on your retirement goals, build a plan that lets you maintain your preferred lifestyle, and help your money last as long as possible.

This begins with having a conversation around your unique situation. It’s good to ask your financial advisor the right questions that help put everything in context. To help you get started, here are some questions to ask your financial advisor about retirement:

• Tell me about what you do to help people with retirement planning.
• How long have you worked as a retirement financial advisor?
• Why do you do what you do, and what are you most passionate about in this field?
• When do you think that I can retire, and what are my options?
• Do I have enough money to retire?
• What should my retirement goals be?
• What do you think of my current financial plan for retirement?
• How much can I spend in retirement? Will I be able to keep up my lifestyle?
• How will I fund my lifestyle once I have retired?
• What will taxes be like for me in retirement?
• How long will my money last before I run out of income?
• What can you do to help me be ready for major financial risks in retirement?
• I have a pension. What could happen if something happened to my old employer or if my pension benefits were cut?
• When should I take Social Security benefits?
• What should I know and do about Medicare and health coverage in general?
• What can healthcare cost me throughout my retirement years?
• What do you do to help my retirement plan keep up with inflation?
• What can happen if I retire in a recession or market crash? How do we plan for that?
• What are some other ‘bad situations’ to keep in mind, and how can you help you plan for those scenarios?
• Say I choose to delay retirement or keep working. What are the advantages and disadvantages of doing that?
• What can we do to ensure that my spouse or I have sufficient financial resources in place should one of us pass away?
• How much could long-term care cost us in retirement? How likely are we to need some sort of long-term care support?
• What sort of life changes have you seen other people experience in retirement?
• What do you think of my estate plan?
• What else can I do to prepare for retirement?

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There are many safe money sources out there, but not all of them are created equal. Not all of these “safe money” guides give you the full picture or other details that may factor into your financial decisions. For example, many safe money options won’t protect your assets from the effects of inflation. Other safe money options may come with additional risks that their issuers might not tell you upfront.

In this article, we will go over safe money options to grow your retirement savings safe and sound. You have a variety of safe money options to accumulate money for your golden years, but their value can differ based upon your situation, need for liquidity, potential for growth, and more.

Let’s cover more of your safe money options available to you now — and how some safe money vehicles stand out more than others in different ways.

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Are you worried about taxes in retirement? You may want to explore Roth deferral as part of your retirement-saving strategy. Roth deferral is a way to reduce your taxable income and drum up tax savings.

In this article, we will go over Roth deferral, what it is, and how to incorporate it in your tax-planning strategy. This article will also cover ways to use Roth deferral to save money on your taxes. Read on for more insights into this tax-smart money move.

With this option, you make after-tax contributions to your IRA or employer-sponsored retirement plan and then take tax-free withdrawals in retirement. This can be a great way to diversify your tax burden in retirement and maximize your income with tax-free dollars.

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The ‘safest’ places to put your money are in low-risk investments and savings vehicles that provide guaranteed growth. These low-risk options include fixed annuities, CDs, Treasury securities, corporate bonds, savings accounts, and money market accounts.

You usually get the highest interest rates with fixed-type annuities of this bunch. There are other fixed-type annuities that can give higher growth potential than guaranteed-rate annuities, if that is something that appeals to you.

Retirement can be an uncertain stage in life. Markets go up and down, inflation rises and falls, and no one knows how long their retirement might last. You can explore options to grow your retirement savings with guaranteed interest earnings and then turn those funds into predictable income streams for retirement.

In this article, we will look at some of the more popular low-risk places to put your retirement money – and what each of those options can involve.

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As a small business owner or an entrepreneur, you are used to taking the lead. But there is one frontier you may still need to master… the future of your retirement. That is a matter of doing what you can to ensure all your hard work leads to your ideal retirement lifestyle.

While a 401(k) plan is the dominant retirement bedrock for employed Americans, small business owners are in a different boat. You are your own employer.

So whether you have zero or 100 employees, you must make the choice to act toward building a strong financial future for yourself. Depending on the workplace benefits of your organization, you may also impact those aiding you in your entrepreneurial dream.   

And Social Security benefits can help, but only to a point. A motivating factor for building up retirement savings is the fact that, as an entrepreneur, you bring home a certain level of income. Portfolio holdings, personal assets, and savings most likely will play into your needs as a high-income household, as Social Security can only go so far.    

Not only that, chances are you make more than the income limit placed by Social Security. For 2024, the maximum amount of taxable earnings is $168,600, up from $160,200 in 2023.

And what is another focal point for small business owners? Over-relying on their business as their retirement safety net. But time and again, historical data has shown this to be true: It’s risky to put all of your eggs – namely, your retirement and financial comfort – into one basket. Read More

Many of us consider retiring at 62 for many different reasons. Sometimes, it’s your health or maybe your spouse’s. You may have reached all your retirement savings goals and want to take advantage of the opportunity. You may just no longer enjoy working.

Whatever your reasons for considering retirement at 62, you should consider several different issues before taking any irrevocable steps. This guide will look at some of those issues and help you get to the point where you can retire at age 62 with a comfortable lifestyle. Remember, these are starting points, and it’s not a bad idea to consult with a financial professional before finalizing your plans.

In the end, the biggest problem you will face retiring at 62 is the gap between 62 and 65 when the most significant retirement benefits – like Medicare – kick in. Cover the gap and make sure you won’t run out of funds, and retirement can be fun!

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Have you heard of Rule 72(t) at some point in your retirement planning? Sometimes you need early access to your retirement accounts; that is, you need to make withdrawals before you reach 59.5.

You can avoid the 10% early withdrawal penalty, even if you don’t meet one of the exceptions, by taking substantially equal period payments under IRS Rule 72(t). To avoid the penalty, you must:

• Follow all the rules and use the funds for any purpose
• Adhere to the strict IRS guidelines
• Not adjust distributions for inflation or any other reason
• Pay taxes on withdrawals from accounts funded with pre-tax dollars

In this article, we will go over more of how IRS Rule 72(t) works, in what situations it might be an option to consider, and what to think about if you are considering it.

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