When it comes to retirement planning, there is a lot to consider.
Retirement planning can be intimidating—especially with all of the jargon.
What are some of these important terms and what do they mean for you?
A recent Stock Investor recent article titled “6 Retirement Estate Planning Criteria You Must Address,” addresses some key terms and criteria for you.
Minimum required yield.
A minimum required yield is calculated based on the income requirements for your household in retirement and your investable assets.
What are "investable" assets?
These would include things like your IRAs or taxable brokerage accounts.
Your risk will increase with as the estimated yield of your portfolio increases.
What if the yield is no longer practical because it is too high?
The typical move is to liquidate assets.
You could use an insurance product like a single premium annuity.
You could also draw down your investment portfolio over time.
"Reliable income" means you there is little to no risk of you losing it.
It can be expected consistently, similar to a paycheck.
Income growth that keeps up with inflation.
This is pretty self-explanatory.
Inflation is a reality.
You will want your investments to account for inflation when growing their dividends.
Liquidity refers to how easily you can convert your investment assets to cash.
In the event of emergencies, you may need to tap into your retirement investments.
At least some of them should be fairly liquid.
Future capital preservation of the investment principal.
When you reach retirement, your capital will likely decrease.
You will use your money on things like daily living and health care.
Do you want to help grandchildren attend college or support their care if they are disabled?
You will need to plan accordingly to maintain your investment capital.
You will also need to work with an estate planning attorney to ensure the money is transferred properly when gifting.
Simple transfer to the surviving spouse.
Most spousal retirement accounts are handled by just one of the spouses.
What happens when this spouse dies?
You will need to set up the account to transfer to the spouse.
You will also want to educate him or her on how to manage the portfolio well.
Indeed, there is much to be when planning for retirement.
Do not go it alone.
Such planning does not lend itself well to a do-it-yourself project.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Stock Investor (May 24, 2017) “6 Retirement Estate Planning Criteria You Must Address”