The 5 Pieces to Your Retirement Planning Puzzle

Today I want to talk about the five pieces to the retirement planning puzzle that if you can develop a strategy for each one of these pieces, you can go into retirement, feeling confident that you've covered all your bases. But first I want to introduce myself. My name is Warren Burger. I'm the owner of Luminary Financial Advisors. We're based in Cocoa Beach, Florida, but we serve people all over the country and we help people create retirement plans with an emphasis on tax efficiency. So before I get started, this framework is based on what we do with our clients but you can totally do this on your own. So the number one piece is income planning, and all that means is that you have a secure and stable way of paying all of your living expenses. So the first thing you have to look at is social security optimization.

 When are you going to take Social Security? If you have a spouse who takes it first these are the sorts of issues that you want to address. You also want to look at your access to your investments and retirement accounts. How are you going to do that? Now, one example we use with clients is that we'll set up a retirement paycheck. Some people opt for every two weeks, every month but they'll literally get a deposit into their account from their investments every two weeks to a month. And it feels like when they were working and they were getting their normal paychecks, and a lot of times what we'll do is we'll also have a separate budget for like vacations or bucket list items that people are working on. And when those things come in we might have them pay with a credit card and then let us know hey, we spent X amount of money on this trip, and then we already have those funds set aside in their investment account to just pay directly either to them to pay their card, or sometimes we pay the credit card directly.

So there's a lot of different ways to do this, but you want to make sure that you're setting yourself up for that stability. And then you're also going to want to look at longevity planning. And all that means is making sure that we are using the funds in such a way that we don't run out of money throughout our retirement. This brings us to number two, which is investment planning. Now you want to make sure that you have a portfolio that reflects your own personal feelings towards risk while still maintaining the growth needed to make sure that you can get to the end of your retirement and, and not run out of money. So I always tell people that there should be a bit of a gut check on this. So if you are seeing on the news that markets are moving or markets are going down you should never feel as though your heart is in your throat when you're looking at your portfolio.

So there's different ways to mitigate that. We use a three bucket strategy. I talk about that on the channel in another video. So you're welcome to take a look at that. Now, once you've established this portfolio, you're going to need to monitor it fairly regularly. We always recommend for people doing it on your own, at least every year you should be looking at your portfolio and rebalancing it back to that that risk tolerance profile versus growth. We do it every quarter but it's important to stay on top of that. Another thing in terms of investment management is asset location. So you may have different

Accounts. You might have a Roth account, a traditional IRA a taxable investment account. Optimizing which holdings you have in each one of those accounts could have a profound effect really from a tax perspective. One example lot of times we're going to want to keep more sort of risk oriented holdings in the tax free Roth because it's going to grow tax free. And so we want to see a more aggressive posture there. Whereas other accounts we might not be as aggressive. And so you can balance those out. Number three is tax planning. And I think it's arguably the biggest piece because I always tell people that the biggest bill that you're going to pay throughout your retirement is your tax bill. So what can we do to mitigate that while still making sure that we pay our fair share of taxes? There are certain things that we're going to look at Roth conversions charitable giving strategies when you're taking that income strategy, massaging tax brackets so that we're leveraging the different accounts that you have to mitigate taxes.

So there are a few different components there and that involves doing some planning and then working with that planning to come back to your CPA. Ultimately, mitigating tax and retirement is a multi-step process. Optimally, your tax planning strategy should begin well before you retire. We like to start implementing some of these strategies and gradually moving towards them within five years of retiring. So just something to keep in mind. Number four is healthcare. We all know the healthcare costs are continually going up the outpace inflation every year. And you want to make sure that you have a really good understanding of Medicare and the benefits that you're going to receive as you turn 65. And then any benefits that aren't covered, we want to make sure that we have a plan in place with funding that could cover certain things that might come up. Now, included in that healthcare planning is how are you going to handle long-term care, long-term care being that care you may need towards the end of your life where you might have somebody that needs to come into the house or you need to go into an assisted living facility and you're unable to take care of yourself.

 What, how do you want that to look? Are, is family going to be involved? Are you going to self-insure and take care of that with your own resources or you're going to look to put in place some insurance? There's a few different options there, but we want to make sure we have that in place well before we're into retirement. And finally number five is legacy and charity planning. And really all that is, is making sure that the assets that you work so far hard for throughout your life, go to the people that you most care about and support the vision and values that you've had throughout your life. So that means that you have a will or a trust in place. It means that you have informed your family of what your wishes are. It means that your beneficiaries on investment accounts, retirement accounts are all set up the way that you would like. And then periodically reviewing that over time to make

Sure, you know, sometimes family situations change, sometimes your wishes may change, that your estate planning accurately reflects what you would like to happen after you pass. And then on the charity side of things there are really that kind of goes with the tax planning and making sure that you are leveraging any charitable giving that you're doing along with your income planning to make sure that you are mitigating taxes in the most efficient way possible. Some people like the idea of pre-gifting, so giving money away before they pass to see the joy on their children or grandchildren's faces or the charity that they're giving to. And you want to just make sure you're doing this in the most tax efficient way and that it also aligns with the longevity planning that we talked about earlier, making sure that you're going to have the funds to last you to the end of your life.

I hope this has been helpful for you. If you have questions about your own personal financial situation, there's a link below to schedule a complimentary call with me. I always tell people that whether or not you decide to work with me, I will make sure that you get pointed in the right direction. I always want to make sure that anyone that has contact with me walks away feeling that they got some value out of that conversation. Also a couple of other things below. I have some links sort of for some checklists and flow charts that are directed for pre-retirees that might be helpful. And then you can look, there's a link to our Facebook group called 10 Years to Retirement, where we put out educational information about retirement issues. Hopefully that's something that could help you as well. Thanks for watching the video and we'll see you next time.

But first I want to introduce myself. My name is Warren Burger. I'm the owner of Luminary Financial Advisors. We're based in Cocoa Beach, Florida, but we serve people all over the country and we help people create retirement plans with an emphasis on tax efficiency. So before I get started, this framework is based on what we do with our clients but you can totally do this on your own. So the number one piece is income planning, and all that means is that you have a secure and stable way of paying all of your living expenses. So the first thing you have to look at is social security optimization.

 When are you going to take Social Security? If you have a spouse who takes it first these are the sorts of issues that you want to address. You also want to look at your access to your investments and retirement accounts. How are you going to do that? Now, one example we use with clients is that we'll set up a retirement paycheck. Some people opt for every two weeks, every month but they'll literally get a deposit into their account from their investments every two weeks to a month. And it feels like when they were working and they were getting their normal paychecks, and a lot of times what we'll do is we'll also have a separate budget for like vacations or bucket list items that people are working on. And when those things come in we might have them pay with a credit card and then let us know hey, we spent X amount of money on this trip, and then we already have those funds set aside in their investment account to just pay directly either to them to pay their card, or sometimes we pay the credit card directly.

So there's a lot of different ways to do this, but you want to make sure that you're setting yourself up for that stability. And then you're also going to want to look at longevity planning. And all that means is making sure that we are using the funds in such a way that we don't run out of money throughout our retirement. This brings us to number two, which is investment planning. Now you want to make sure that you have a portfolio that reflects your own personal feelings towards risk while still maintaining the growth needed to make sure that you can get to the end of your retirement and, and not run out of money. So I always tell people that there should be a bit of a gut check on this. So if you are seeing on the news that markets are moving or markets are going down you should never feel as though your heart is in your throat when you're looking at your portfolio.

So there's different ways to mitigate that. We use a three bucket strategy. I talk about that on the channel in another video. So you're welcome to take a look at that. Now, once you've established this portfolio, you're going to need to monitor it fairly regularly. We always recommend for people doing it on your own, at least every year you should be looking at your portfolio and rebalancing it back to that that risk tolerance profile versus growth. We do it every quarter but it's important to stay on top of that. Another thing in terms of investment management is asset location. So you may have different

Accounts. You might have a Roth account, a traditional IRA a taxable investment account. Optimizing which holdings you have in each one of those accounts could have a profound effect really from a tax perspective. One example lot of times we're going to want to keep more sort of risk oriented holdings in the tax free Roth because it's going to grow tax free. And so we want to see a more aggressive posture there. Whereas other accounts we might not be as aggressive. And so you can balance those out. Number three is tax planning. And I think it's arguably the biggest piece because I always tell people that the biggest bill that you're going to pay throughout your retirement is your tax bill. So what can we do to mitigate that while still making sure that we pay our fair share of taxes? There are certain things that we're going to look at Roth conversions charitable giving strategies when you're taking that income strategy, massaging tax brackets so that we're leveraging the different accounts that you have to mitigate taxes.

So there are a few different components there and that involves doing some planning and then working with that planning to come back to your CPA. Ultimately, mitigating tax and retirement is a multi-step process. Optimally, your tax planning strategy should begin well before you retire. We like to start implementing some of these strategies and gradually moving towards them within five years of retiring. So just something to keep in mind. Number four is healthcare. We all know the healthcare costs are continually going up the outpace inflation every year. And you want to make sure that you have a really good understanding of Medicare and the benefits that you're going to receive as you turn 65. And then any benefits that aren't covered, we want to make sure that we have a plan in place with funding that could cover certain things that might come up. Now, included in that healthcare planning is how are you going to handle long-term care, long-term care being that care you may need towards the end of your life where you might have somebody that needs to come into the house or you need to go into an assisted living facility and you're unable to take care of yourself.

 What, how do you want that to look? Are, is family going to be involved? Are you going to self-insure and take care of that with your own resources or you're going to look to put in place some insurance? There's a few different options there, but we want to make sure we have that in place well before we're into retirement. And finally number five is legacy and charity planning. And really all that is, is making sure that the assets that you work so far hard for throughout your life, go to the people that you most care about and support the vision and values that you've had throughout your life. So that means that you have a will or a trust in place. It means that you have informed your family of what your wishes are. It means that your beneficiaries on investment accounts, retirement accounts are all set up the way that you would like. And then periodically reviewing that over time to make

Sure, you know, sometimes family situations change, sometimes your wishes may change, that your estate planning accurately reflects what you would like to happen after you pass. And then on the charity side of things there are really that kind of goes with the tax planning and making sure that you are leveraging any charitable giving that you're doing along with your income planning to make sure that you are mitigating taxes in the most efficient way possible. Some people like the idea of pre-gifting, so giving money away before they pass to see the joy on their children or grandchildren's faces or the charity that they're giving to. And you want to just make sure you're doing this in the most tax efficient way and that it also aligns with the longevity planning that we talked about earlier, making sure that you're going to have the funds to last you to the end of your life.

I hope this has been helpful for you. If you have questions about your own personal financial situation, there's a link below to schedule a complimentary call with me. I always tell people that whether or not you decide to work with me, I will make sure that you get pointed in the right direction. I always want to make sure that anyone that has contact with me walks away feeling that they got some value out of that conversation. Also a couple of other things below. I have some links sort of for some checklists and flow charts that are directed for pre-retirees that might be helpful. And then you can look, there's a link to our Facebook group called 10 Years to Retirement, where we put out educational information about retirement issues. Hopefully that's something that could help you as well. Thanks for watching the video and we'll see you next time.