Aug 8, 2024
Simplify Your Financial Life
Written by: Bridget Handke, CFP®, CAP®
Whatever your age or stage in life, managing your finances can often feel overwhelming. Whether you...
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“Do I have enough for retirement?" and "How do I create a retirement paycheck?" are a couple questions that may be causing you to seek the help of a financial advisor. You’ve realized you want someone to help you stay on track to attain the retirement lifestyle you want. Not only to answer your questions but to help guide you in the right directions and change course when necessary.
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We work with you to determine what your income looks like in retirement and when we manage your portfolio, we’re focused on managing downside volatility, especially early in your retirement. Today, people are not only living longer, but they’re experiencing many healthy, robust retirement years. As a result, our strategy turns toward creating a long-term, sustainable portfolio, rather than moving heavily into income-producing assets as soon as retirement begins.
Before a client decides to retire, we work with them to determine if they are financially ready to retire. Can they meet all their goals with a high probability of success? If their plan doesn’t look good, can they plan to spend less in retirement or work a little longer? Does their plan look terrific? If so, what bucket list items can they fit in. Would they like to add gifting or charitable contributions to their plan?
At Birchwood, we work with clients to determine what their income looks like in retirement.
It’s a bit of a puzzle, but as financial advisors we work with the software to determine how much to withdraw that will create the least taxes in the long run. Additionally, our investment team is determining from which investments to pull the funds. Since we create diversified portfolios, we can find a good asset to use in almost any kind of market. For example, when the stock market is down, we may consider selling from bonds. When bonds aren’t doing well, we may consider selling from stocks to get the cash. This cash helps create the retirement paycheck.
One of the key and critical decisions is when to take Social Security. People can start Social Security as early as age 62, but if they do, they’ll take a permanent trim to their benefits. For many people who have assets and good health, it makes more sense to delay Social Security until full retirement age, when a person may first become entitled to full or unreduced retirement benefits. For some, waiting until age 70 is even better as the Social Security paycheck goes up 8 percent per year from full retirement age until age 70. There are currently no investments available that can guarantee you 8 percent.
