1.How do I know if I can retire?

Are their any online Retirement Calculators to use, to see if I can retire?
One thing that you may notice while looking through the toolbox is that we currently are not supporting any online “Retirement Calculators”. There are MANY that are free on the internet. The problem is that in our experience these calculators are overly simplified for ease of use and give erroneous answers. Although they may give you nice pictures/charts and be a “feel good” starting point, we feel that you really need to work with an expert to get reliable results from any calculator or projections. For examples of these calculator issues, please see the article on Why You Can't Trust Retirement Calculators.

Do you know your Hurdle Rate?
Your Hurdle Rate is the minimum needed portfolio rate of return to reach your retirement goals without running out of money.

How much should I have in my portfolio in order to retire (a.k.a. retirement number)?
Many people focus on how much money they need to be able to retire. That number is not really what you need. You should focus on how much you want or need to be able to withdraw each month.

What if I am retiring early (especially before age 59 1/2), are there any special issues to consider?
Whether you make the decision, or the decision is outside your control (health issues or whether you are laid off during a downturn), there are many issues to address. The younger you are, the more issues you need to consider.  Please follow the link to this article When Retirement Comes Early” where some of these issues are addressed.

What are the tax issues you need to address specific to the year you retire, especially when receiving retirement package?
There are many issues related to optimizing tax planning (minimizing taxes), avoiding the Obamacare 3.8% Tax, while taking advantage of annual tax planning strategies.

If you have a pension plan, 401k or deferred compensation, what are the tax or planning issues to consider? There are several tax issues that need to be considered:

  1. If you have any taxable distributions such as deferred compensation payments, you may be thrown into a higher tax bracket when you retire.
  2. You may be given the opportunity or be required to a decision related to your pension plan.
  3. If you have company stock inside of your 401k plan (with net unrealized appreciation or NUA), you may have to make some 401k Rollover decisions. As these decisions are important and are many times irrevocable, it is important to review all of your options and related tax considerations.

How should you determine your retirement budget?
It is important to make sure you have adequate of cash on hand (target at least 12 months expenses) prior to retiring and to also understand the complexities and strategies for getting money out of your retirement plans. It is also good to have a well-considered and thoughtful budget while closing the retirement income gap. By planning for this, you will be more likely to be able to maintain your retirement lifestyle over the long-term.

Should you consider downsizing my lifestyle and/or home as part of your retirement plan?
It is important to be able to determine whether you can maintain your current lifestyle. The first step is to review your budget and see if you have any income gaps. There many tax, financial, and spending considerations that you will need consider to determine whether it is appropriate to downsize your lifestyle and/or possibly move in retirement.

Already picked your retirement dream home? Not so fast!

5 Real Estate mistakes retirees make

Many have heard that they can take 4% or 5% from my portfolio safely without running out of money in retirement…does that work?
These retirement “rules of thumb” may or may not work in your situation. In reality, you must consider your safe withdrawal rates (how much you can withdraw and live on each year without running out of money).

In retirement, what “rules of thumb” can we count on?
Before retirement, it is time to take a “Retirement Reality Check”. Of course no “rule of thumb” can replace the peace of mind that comes from an updated and customized financial plan.

No one wants to retire when the stock market is down, so what should you do if you feel that you are “Retiring in a Bear Market”?

What should you consider when reviewing your Severance or Early Retirement offers?
When you receive any severance or early retirement agreement, there are many tax and other financial planning issues and decisions that need to be considered (and be reviewed by your financial and legal team), such as:

  1. When considering the package and your other assets, will your assets provide enough income to support you and your family in retirement?
  2. What do you need to earn on your savings and portfolio to maintain your lifestyle (what is your personal Hurdle Rate)?
  3. Will retirement affect your pension and other benefits (like health insurance)?
  4. What will you do after retirement – fully retire or find job?
  5. To receive the package, will you be forced to sign away any rights or be committing to any non-disclosure/confidentiality/non-compete provisions?
  6. How much of this settlement will you lose to income and/or payroll taxes?
  7. Should you file for unemployment benefits or Social Security (and should you claim early if not at Full Retirement Age)?
  8. What should you do about your 401k Plan (in terms of a rollover to an IRA and what should you do with your company stock)?
  9. What happens if we enter a Bear Market...how can and should you protect your portfolio so you don’t run out of money?

If you get a lump sum of cash as an early retirement package, what should you do with it?
When offered a package or as you enter retirement, many receive some lump sum benefits. Some of the initial questions we get asked are “what should I do with that cash” (it is time to look at or create your retirement budget) or “is there anything I should do tax-wise to minimize the tax impact”. As everyone’s situation is unique, it is important to meet with your planning and tax team to discuss these issues before making any irrevocable decisions so that you will find the best ways to optimize your situation.

Will you be paid for your unused earned vacation?

Should you apply for and are you eligible for Texas Unemployment Insurance and how much will you receive.

Do you want to retire to another state or need to move for a new job, are there any issues you should be considering?

2.How can I Maximize my Social Security?

When should you start your Social Security?
If you are at or past age 62, many consider starting Social Security. Before you start, you should consider the downsides of starting early, and look for strategies to maximize your Social Security Benefit.

What is the real benefit of waiting?

The fear that Social Security is going “bankrupt” and that you need your money NOW to maximize this benefit may persuade you to take benefits sooner rather than later.  However, doing so may have a big impact on how much money you and your family receive, especially for married couples. These issues are outlined in our article Why it Pays to Delay Taking Social Security. Bottom line, It is important to review all of the possible issues (and assumptions to consider) specific to your particular situation.

3.How should I manage my Cash Flow and Budget?

Review your overall cash on hand and retirement budget.
When entering and preparing retirement it is prudent to have a budget and/or understand your short-term cash flow needs. I typically recommend keeping around 12 months of expenses in cash at all times. It is also important to know how best to access your retirement assets. Christine Benz’s article from Morningstar.com discusses some of the situations and strategies.

Where will you get my money when the monthly paychecks stop (where will you get your “Retirement Paycheck”)?
In retirement, it is important to prepare and have tax-optimized “buckets” to pull cash from to replace your paycheck. They typically can come from: Social Security, Severance, 401k, IRA, Roth, brokerage, and/or life insurance cash value. How and when to best utilize these resources.

4.How do I maximize the value of my pension and retirement plans?

When should you start my company pension?
When you receive a retirement package, you may have options regarding company pension plan. It is important review your pension plan document and to understand your available options in order to maximize this valuable benefit given your financial goals. Typical decisions and options may include:

  1. Starting immediately vs. waiting until it is fully vested (such as at age 65),
  2. Taking the pension as a lifetime annuity vs. taking it as a lump sum, or
  3. Knowing your annuity payment options and survivor benefits (such single life, 50% survivor, 100% survivor, etc.)
  4. See the attached summary on How to Maximize Your Pension


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