Retirement Income Planning in Orlando
Preparing for the Future in Orlando
Are you planning to retire? To make your retirement possible, you need
to establish a retirement income. In retirement, you are no longer drawing
a regular paycheck from work. Instead, you are drawing income from the
savings you have accumulated prior to retirement. In essence, your focus
has shifted from accumulating wealth to spending it. This is a major transition
that requires specialized retirement income planning and good retirement
advice. As one of the best investment firms,
Nelson Financial Planning has financial advisors that can guide you through the retirement accounts
process and help simplify the retirement savings process.
Your retirement income can be affected by your:
- Prior compensation
Taking the Necessary Steps
There are a couple of necessary steps that you need to take to establish
your retirement income. The first step requires that you determine the
tax nature and prior earnings that you have accumulated for retirement.
A 401k plan and 403(b) accounts have more restrictive tax withholding
rules and beneficiary options than Individual Retirement Accounts (IRAs).
Depending on your age, income from a deferred compensation plan has lower
tax implications than IRAs. Individual accounts have lower tax implications
than IRAs. In retirement, you want to maximize income from those accounts
with the least tax implications so you can keep more of your retirement
income to spend.
Start Looking at Your Expenses
The second step is to review the unique expenses that occur in retirement.
These “additional” expenses often get overlooked in normal
retirement planning. In retirement, you have more “free” time
than you had when you were working. When you have “free” time,
you are more likely to travel, play golf, or enjoy your hobbies. These
activities require money and you need to plan for these extra expenses
when you begin planning your retirement.
In addition, you will most likely be paying for your own health insurance.
The cost of health insurance is a significant “additional”
retirement expense that needs to be taken into consideration.
Next, an analysis needs to be done on outstanding debt that you have prior
to entering retirement.
The most common forms of debt that are often overlooked include:
- Student loans
- Credit card debt
- Car or vehicle loan
Social Security & Retirement
A portion of your retirement income will most likely come from Social Security.
The decision of when to take Social Security is based upon a variety of
factors such as age, work history, spouse’s work history and continued
earnings. The decision is even more complicated for a married couple who
can collect on each other’s previous work history, pension plan
and retirement benefits. Once we have gone through these first few steps,
we can then calculate your projected tax liability in retirement. We do
this by thoughtfully examining the amount of retirement income you need
and the nature of the taxes on the income you would be receiving.
Of one of the most intricate and confusing parts of this process is determining
your Social Security benefits. Your benefits can either be excluded from
taxation or included at up to 85% of your overall benefits. This inclusion
as income is a function of the total taxable amount of your other retirement
income. Depending on what that amount is and where it comes from, it is
often possible to minimize the taxation of your Social Security benefits.
Remember, in retirement you still have to pay Uncle Sam his share but
the more you keep from him the more you get to spend!
Examining Your Private Investment Portfolio
The next step in the retirement income planning process is to review your
total overall private investment picture. Our financial advisors compare
this with the amount of total retirement income needed and begin retirement
By examining your overall investment portfolio, we can:
- Determine if you need to adjust your expenses or your investments
- Figure out whether your retirement plan is accurate
- Discuss whether you need to find part-time employment in retirement
In addition, we review the actual allocation of all of your investments
in order to ensure they are properly positioned to generate the necessary
retirement income. This allocation is based not only on the underlying
performance of the available investment options, but also on an individual’s
risk tolerance, time horizon, goals, and objectives. Some of these investments
must also be allocated to provide for underlying growth in order to keep
up with inflation in retirement. This is particularly important because
retirees often experience a higher rate of inflation than the general
public due to their consumption of health care.
We’re Here to Help!
If all these steps seem complicated, they are! Providing independent personalized
retirement income and estate planning solutions is an intricate process.
If you would like to schedule a free consultation to review or prepare
your retirement income plan, please
contact our office at (407) 629-6477 today!