Top Ten Financial Planning Tips for a Comfortable Retirement

On May 20th, David Letterman ended his legendary run as a late night talk show host logging 6,028 episodes of Late Night with David Letterman and the Late Show with David Letterman in his thirty-three year career. With an interviewing style described by some critics as “acerbic” and “hard-nosed” and memorable segments like his nightly Top Ten List, Stupid Human Tricks, and Stupid Pet Tricks, Letterman quickly developed a cult-following among late night television viewers.

So in honor of David Letterman’s historic thirty-three year run as late night talk show host, we present our own top ten list.  “From the home office in Maumee, Ohio, the Top Ten Financial Planning Tips for a Comfortable Retirement.”

10 - Make Sure You Have the Estate Plan You Want

What many people don’t realize is that everyone has a default estate plan: probate court. Probate courts administer the proper distribution of assets of a decedent. If a person dies intestate (without a valid will), then it is the court’s responsibility to administer the estate. Working with an attorney who specializes in estate planning can ensure your assets are distributed in the manner you wish, and can save a tremendous amount of money and time when it comes time to distribute the estate assets. If you would like to begin your estate planning, or would just like a second opinion on your existing estate plan, we are happy to provide an introduction to an attorney who specializes in estate planning.

9 - Don't Chase Returns

Afraid you are missing out because you didn’t own the best performing fund last year? There is no better formula for buying high and selling low than chasing past performance. If you have a properly-allocated, well-diversified portfolio you won’t have to chase returns and you will avoid buying high and selling low.

8 - Review Your Beneficiaries

A lot can change in a year’s time. Make sure your assets will go where you intend. Review your beneficiary designations on all IRA accounts, annuities, and life insurance policies. Have questions about beneficiary designations? We are happy to answer your questions or introduce you to an estate planning attorney.

7 - Rebalance Your Portfolio

Rebalancing your portfolio is the disciplined way to buy low and sell high. The most common approaches for rebalancing are based on time or the percentage change in a portfolio allocation. Regardless of the method chosen, maintaining a disciplined portfolio allocation can help in reducing risk and provide more consistent investment returns.

6 - Reduce the Cost of Your Investment Portfolio

According to industry researchers Lipper and Morningstar, the average mutual fund expense ratio is over one percent, and that doesn’t include trading and transaction costs. There are cheaper alternatives that can reduce your costs of mutual fund ownership by one-half or more, as clients of Bollin Wealth Management are currently enjoying. These cost savings can put ‘extra’ tens to hundreds of thousands of dollars back in your retirement nest egg over a thirty or forty year investing timeline.

5 - Start a Roth IRA

The flexibility of a Roth IRA makes it an invaluable tool for a variety of planning purposes regardless of the investor’s stage of life. It can become increasingly more valuable later in retirement in helping retirees avoid the ‘tax torpedo’ associated with Required Minimum Distributions. Give our office a call to start Roth IRA today if you haven’t already done so.

4 - Don't Forget About Inflation

While inflation has been pretty tame over the past decade compared to historical standards, there is no greater threat to your secure retirement than the erosive effects of inflation. At historical inflation levels the purchasing power of your money is cut in half every twenty to twenty-five years. With retirements routinely stretching three and sometimes four decades, faulty retirement income planning could tarnish your ‘golden years.’

3 - Contribute to Your Employer's Retirement Plan

There is no easier way to start building your retirement nest egg than participating in your employer’s retirement plan. According to the Department of Labor, nearly 80 percent of full-time workers have access to employer-sponsored retirement plans. And over 80 percent of those workers participated in the plan. How much should you save? At a bare minimum you should contribute what is required to realize the full employer match, but saving 10 to 15 percent of your salary should be your goal.

2 - Don't Tap Traditional Retirement Accounts Before Age 59½

The number one cardinal sin of retirement planning is withdrawing from traditional retirement accounts before age 59 ½.  Not only will you pay ordinary income tax on your withdrawals, you will also be assessed a 10 percent penalty on the amount withdrawn. To add insult to injury, you will miss out on years, and potentially decades, of tax-deferred growth of your retirement nest egg which can put you in jeopardy of not realizing your retirement goals.

1 - Work With an Experienced Financial Planner Who is Fudiciary

Few industries make it more difficult for consumers to fully understand the quality of the advice they are purchasing than the financial services industry. Because of this, painfully few investors know the difference between the two standards of client care that financial advisors are held to: the fiduciary standard and the suitability standard. A fiduciary standard requires that your advisor put your interests above everything else, while the suitability standard only requires recommendations that are ‘suitable’ for your situation. There is a wide chasm between the two standards of care, and the suitability standard of care has been shown time and again to promote abusive behavior among advisors who are held to the lower standard of care.  

Call our office at 419-878-3934 to find out if your advisor is a fiduciary or how to find an advisor who operates under the fiduciary standard of care.