Retirement Planning

While some of us claim we can never retire, or we love what we do so much that we don’t want to retire, retiring comfortably is usually one of the most important goals of most people. Retirement is when you stop earning and therefore accumulating savings and assets. Instead, you begin spending more than you earn, and start decumulating assets.

How Much Do You Need to Retire?

This important question can have a different answer for everyone. The answer is really about matching your income with your retirement spending and ensuring you will have enough that you won’t run out of money prior to you and your spouse dying. At the same time, you need to plan for what happens if one spouse dies first or if one or both spouses need long-term care. If you are not married, you might have additional questions about care in your old age. All of these factors are part of the answer to how much you need to retire.

Retirement Income Sources

There are really four possible sources of funds for retirement:

Social Security – Most Americans become eligible for Social Security as early as age 62 but can maximize lifetime payments by delaying Social Security to age 70. Social Security is a guaranteed government benefit, which is indexed for inflation and usually the bedrock of everyone’s retirement income because it’s one of the few income sources indexed for inflation. Note that some workers, typically government or railway workers are not eligible for Social Security. At Cereus Financial, we help clients with strategies to maximize the value of their Social Security payments.

Pension or Annuity payments – Pensions provide guaranteed income from an employer retirement plan. While many private employers have stopped providing pensions, they can still be found with government and a few private employers. Some individuals have also bought private annuities, which provide guaranteed income. We help our clients to understand when to start their pension or annuity payments, whether it makes sense to take a lump sum or periodic payments, and how to structure those payments. We always evaluate whether it makes more sense to buy a single premium immediate annuity to create even larger guaranteed income from your existing pension or annuity. We also advise you how to make sure both spouses are protected from loss of income when the first spouse dies.  

Inheritance, or Sale of Business or Asset – Sometimes you might get a large lump sum from selling your business, investment property, or an inheritance. At Cereus, if we are engaged prior to the sale, we can advise you on ways to minimize your tax exposure from the transaction. For asset sales, strategies such as installment sales or charitable trusts can create income streams and lower your tax liability. We can then advise you on how to invest the lump sum in order to meet your retirement income, charitable, or legacy goals.  

Savings and Investments – You might have saved money in your 401(k), 403(b), IRA, or other tax-qualified retirement account. You may be accustomed to saving for retirement, but you may need help understanding how to start taking distributions from your retirement savings in order to fund your spending needs. Your investment mix during retirement will likely need to be more conservative (but not always) and Cereus Financial Advisors can help you change your investment portfolio and plan for distributions.

Spending During Retirement

Retirement means different things to different people. For some, it might mean travel and exploration, for others, it might mean volunteering and community involvement. Sometimes retirement can mean finally creating a business from a favorite hobby. Whatever it means for you, at Cereus Financial Advisors, we help you model your retirement spending based on what your retirement looks like. We can create multiple scenarios and tell you what you can afford to spend on your hobbies or travel. When you work with us, it will no longer be a mystery how to balance your spending with your income.

We can determine how much to estimate for medical insurance and put aside some money for medical care. Everyone should also have a long-term care plan and we can help you figure out what makes sense for you.

Saving For Retirement

If retirement is a ways off for you, we can help you understand how much you should be saving and where those savings should go. For must employed people, the first place to look is your employer’s 401(k) or other retirement plan. But if you are self-employed, we can help you set up your own tax-qualified retirement plan. This can help you save, but also lower the amount of tax you pay now.

Small and Medium Business Retirement Plans

If you own a company, you should be thinking about having a retirement plan for your business. If you have employees, a safe-harbor 401(k) can be an inexpensive way for you to save for retirement and give your employees a way to save as well. There are many tax benefits for your company to provide a retirement plan and it allows you to save money which will be protected from creditors. If you don’t have any employees, a solo-401(k) can help you save a significant amount of money. There are other simple forms of tax-qualified plans, such as SEP IRAs and SIMPLE IRAs.

Business owners can add profit sharing plans which can legally maximize benefits to the company owner. Some business owners could tax-defer as much as $66,000 per year to a defined contribution plan (such as a 401(k)) or $265,000 per year to a defined benefit pension plan. At Cereus, we have experience setting up 401(k) plans and have partners who can help you with profit sharing and defined benefit plans. Business owners tend to invest everything back into their business, but you need to pay yourself first and separate your retirement savings from your business.

Sticking with your plan is important. Our role at Cereus Financial Advisors is to help you formulate a long-term plan and then stick with it. We help sift through the important economic news to stop short-term thinking which can derail a long-term plan. We will regularly review your plan to ensure that any necessary changes are made, without trying to time the market or make other mistakes that can lower returns.

Whatever your stage in life, the team at Cereus Financial Advisors can help you with your important decisions. We help you understand how much to save, where to save, where to invest, how to structure your accounts to minimize your tax burden, and how to plan for the unexpected. We create portfolios designed to help you meet your goals and work with you every step of the way. The biggest benefit to working with Cereus Financial Advisors is that we want our clients to be educated and informed. We are your trusted partner as you save for, plan for, and finally enter retirement.

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