Every day we meet individuals, who plan to retire within the next 10 years, concerned they will run out of money during retirement. Your income plan must include a plan of reliable and increasing income that will outlast you
Littleton, Colorado (PRWEB) December 26, 2016
Karlan Tucker, President and CEO, of Tucker Financial Solutions offers 7 retirement income planning tips for 2017. Tucker Financial Solutions is a full service retirement planning, financial advisory and investment firm.
1. Hold a year-end review
If you plan to retire in the next five years, or are currently retired, December and January is a great time to conduct a review of your retirement income plan. Are you on track? Is your principal protected from market downside? Are you on track to meet your goals? “Every day we meet individuals, who plan to retire within the next 10 years, concerned they will run out of money during retirement. Your income plan must include a plan of reliable and increasing income that will outlast you. How could upcoming life events or employment impact your current plan? Year end is a great time to schedule a second opinion to review your plan,” noted Tucker.
2. Reduce Fees
Research and analyze the fees that are currently embedded in your portfolio. FINRA offers an excellent tool to analyze mutual funds, EFTs and ETNs. Enter the mutual funds, EFTs and ETNs in your portfolio and analyze the net fees for a specific holding period. Typically, 10 years holding period provides a good benchmark to costs. “Many times after we provide a portfolio review for a prospective client, they are shocked at the amount of fees and other costs we uncover. Taxes and fees are corrosive to a retirement plan principal and earnings. Minimizing both taxes and fees can provide a more secure retirement,” added Tucker
3. Lower Your Tolerance for Risk
As the Dow attempts to crack the 20K milestone, don’t get complacent and keep a majority of your assets exposed to the market. The stock market appears to have cyclical patterns; its highs and its lows can bring a sense of achievement or despair. Avoid the emotions of the market.
“In 2017, consider taking some risk off the table. Ask yourself: 'if the market drops substantially over the next several months, how will that impact my retirement income plan?' In many cases, a market drop of 10% or greater can substantially impact the plan. You might consider fixed index annuities as a way to lower the risk and yet provide a retirement income vehicle,” said Tucker.
4. Enjoy the Upside, Minimize the Downside
If you want to participate on the potential upside in the market, consider this: fixed index annuities as a way to participate in the market upside yet protect your principal from the market downside. The Financial Research Corporation of Boston noted “no other investment vehicle can rival the income annuity for retirement security.”
“The annualized Dow Jones Industrial Average (DJIA) has averaged just 3.4% in the last 16 years. You invest your hard earn capital into stock market. You take the risk; but, there isn’t much reward,” added Tucker.
5. Start Preparing for Health Care Expenses and Long-Term Care
Health care and long-term care continue to rise year over year. Start planning now on how to pay for these expenses during your retirement years. Health care and long term care costs are fast ways to exhaust retirement savings, home equity, and other assets. “The odds are high that many retirees will need some form of long-term care. It can financially wipe out a couple’s savings in a matter of months. You don’t have a retirement plan if health care and long-term care is not planned for,” said Tucker.
6. Cut Costs, Save More
Saving when employed is easier than going back to work at age 70 because you didn’t save enough while working in younger years. Retirees who enter back into the work force after retirement are often working for minimum wage because of a lapse in skill set and experience. Find ways now to lower spending: housing, cell phone, cable, college expenses, insurance, and automobiles, etc. Take a lesson from the younger millennials. Millennials are creatively cutting housing, transportation, and entertainment costs to maintain their lifestyles.
“Review all of your household operating costs. What can you lower or cut to help achieve your retirement income goals? Lowering a cable, skipping going out to a restaurant or eliminate a cell phone bill can make a substantial difference. Calculating a 5% annual compound rate while saving $200 per month over 15 years, an individual could have $52,000 in savings,” added Tucker.
7. Avoid Taxes in Retirement
Income taxes and real estate taxes in retirement are difficult to predict. Many economists believe that the Federal government will need to increase taxes to offset the multi-trillion dollar deficit. If you plan now, there are several ways to get tax free income in retirement. “If taxes rise in retirement, you need a plan to receive tax free income from your Roth IRAs and the cash values of a life insurance policy,” said Tucker.
About Karlan Tucker
Karlan Tucker is the CEO and Founder of Tucker Financial Solutions located in Littleton, Colorado. He is also a radio talk host and author. He's been interviewed nationwide on television and radio stations. Since 1991, he and his advisory team have helped Coloradans successfully retire. Regularly Karlan Tucker reviews topics on investing, retirement, college planning and taxes.
About Tucker Financial Solutions
Tucker Financial Solutions, a retirement and investment advisory firm, specializes in fixed index annuities, life insurance, asset management, and college funding. Tucker Financial Solutions, founded in 1991, is located in Littleton, Colorado. Tucker Financial Solutions is part of the Tucker companies, which include Tucker Advisors, Tucker Asset Management, and Tucker College Solutions. Investment advisory services provided through Tucker Asset Management LLC, a register investment adviser. Guarantees are based on the claims-paying ability of the insurance company.