We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
How to Retire at 62 in 2026 With Peace of Mind
Radon and Murs discuss:
How to build the foundational steps for retiring at age 62 and achieving peace of mind in retirement planning. They dive into the critical questions that need to be answered, the data required to assess retirement readiness, and the steps to create a retirement roadmap. With this episode as the first of a two-part series…
We often begin retirement planning by addressing foundational questions. This includes understanding your goals, taking an inventory of your financials, and clarifying expenses. Our Peace of Mind Roadmap process is designed to help you retire with confidence. It consists of two parts:….
Retirement is an exciting milestone, yet it comes with important questions: “Have I saved enough?” and “Can I truly retire comfortably?” If you’re planning to retire at age 62 in 2026, the steps you take now will shape your financial freedom and peace of mind. This guide, inspired by our Secure Your Retirement podcast, walks you through how to prepare, what questions to ask, and how to build your personalized Peace of Mind Roadmap.
The Peace of Mind Roadmap: A Two-Step Approach
We often begin retirement planning by addressing foundational questions. This includes understanding your goals, taking an inventory of your financials, and clarifying expenses. Our Peace of Mind Roadmap process is designed to help you retire with confidence. It consists of two parts:
Gathering Data: Collecting and organizing financial information, understanding your goals, and clarifying your spending needs.
Building Your Plan: Analyzing your data, exploring scenarios, and developing a financial plan tailored to your needs.
Let’s break these steps down so you can start preparing your Peace of Mind Roadmap.
Step 1: Gathering the Right Data for Retirement Success
The cornerstone of any effective retirement plan is accurate and comprehensive data. Here’s what you need to consider when gathering your financial information:
Assets: Building Your Financial Snapshot
We ask clients to create a financial inventory, which helps determine if retiring at 62 is feasible. Here are the key areas to assess:
Cash on Hand:
How much do you have in checking, savings, money market accounts, or CDs?
Understand the purpose of your cash: Is it for emergencies, investments, or daily expenses?
Life Insurance:
What types of policies do you have?
Is the policy term or permanent? If permanent, is it intended for income, cash value growth, or a death benefit?
Annuities and Non-Qualified Investments:
Are your annuities growth-oriented or income-generating?
Identify other investments like brokerage accounts or stock portfolios.
Retirement Accounts:
Document your IRAs, 401(k)s, and Roth accounts.
Know your employer match for current contributions.
Real Estate:
Evaluate the value and liabilities of your primary residence and investment properties.
Pensions and Deferred Compensation Plans:
Understand the income stream from pensions, including cash balance plans or deferred compensation plans.
Liabilities: Understanding Debt and Cash Flow
Taking stock of debts is essential when planning to retire comfortably:
Mortgages: Determine your payoff timeline and monthly costs.
Car Loans: Factor in when these will be paid off.
Other Debts: Include liabilities like credit cards or personal loans.
Income Sources: What’s Coming In?
Your retirement plan is only as strong as its income streams. These include:
Social Security: Get an estimate of your benefits at 62, full retirement age (67), and age 70.
Part-Time Work or Consulting: Will you continue working to supplement your retirement income?
Rental Income: Calculate how much income investment properties generate.
Expenses: Breaking Down Spending
A well-rounded retirement plan accounts for three categories of spending:
Essential Needs:
These include fixed costs like mortgage payments, utilities, and groceries.
Wants:
Travel, hobbies, dining out, and memberships fall under this category.
Legacy Giving:
Charitable donations and gifts to family are also part of your financial picture.
Tip: Focus on net spending—what you need monthly after taxes. This ensures a realistic view of your financial needs.
Estate Planning Essentials
A solid plan for retirement includes preparation for the unexpected. Ensure you have up to date:
Will
Power of Attorney
Healthcare directives
HIPAA release forms
These documents protect you and your loved ones in the event of unforeseen circumstances.
Step 2: Building and Analyzing Your Peace of Mind Roadmap
Once you’ve gathered the data, it’s time to analyze it and build your Peace of Mind Roadmap. This is where we apply financial modeling to answer the critical question: “Does my plan work?”
Scenario Analysis
In your Peace of Mind Roadmap, we create various scenarios to test the strength of your plan. For example:
What if inflation rises faster than expected?
How will healthcare costs impact your savings?
Can your assets sustain your lifestyle if the market underperforms?
By running these scenarios, we identify risks and opportunities in your plan.
The Importance of Regular Reviews
Even the best retirement plans require regular updates. We recommend reviewing your plan annually. By monitoring your financial picture, you can adapt to changes in the economy, taxes, or your personal goals.
Addressing Common Retirement Concerns
As you plan your retirement at 62, here are answers to some common questions:
Is Social Security Enough to Retire at 62?
Social Security alone is rarely sufficient to cover retirement expenses. By understanding your benefits and supplementing them with other income sources, you can create a balanced plan.
What Happens If I Outlive My Savings?
Longevity risk is a top concern for retirees. Solutions like annuities, disciplined withdrawals, and proper investment strategies help your assets last throughout retirement.
How Do I Plan for Market Downturns?
Diversifying your portfolio and maintaining a cash reserve are key strategies to protect your retirement savings during volatile markets.
The Role of Professional Guidance
Retiring comfortably at 62 is achievable with the right planning and guidance. A financial advisor can help you:
Align your investments with your goals.
Minimize taxes through strategies like Roth conversions or tax-efficient withdrawals.
Create a sustainable withdrawal plan that protects your principal.
Final Thoughts on Retiring at 62 in 2026
Retiring at age 62 is a dream for many, but it requires intentional planning and preparation. By gathering accurate data, understanding your expenses, and building a personalized plan, you can achieve peace of mind and enjoy the retirement you’ve worked hard for.
Schedule your complimentary call with us to ask any questions you may have from this blog. If your questions don’t all fit in a 15-minute call, we will guide you to the next steps to get some answers.
Plan wisely, stay informed, and secure your future. Remember, the key to retiring at 62 in 2026 with peace of mind is creating a comprehensive plan and sticking to it.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for December 2, 2024
Nationwide Monument Advisor For Tax Planning Strategies in Retirement
Radon Stancil and Murs Tariq discuss the Nationwide Monument Advisor, a unique variable annuity designed to optimize tax planning strategies for retirement. Learn why Radon and Murs believe this tool can be a game-changer…
Nationwide Monument Advisor For Tax Planning Strategies in Retirement
Planning for retirement requires a comprehensive approach, especially when it comes to tax-efficient strategies that allow you to maximize the growth and distribution of your investments. Enter the Nationwide Monument Advisor, a unique variable annuity that we regularly recommend as a strategic tool for tax planning. But wait…..
Planning for retirement requires a comprehensive approach, especially when it comes to tax-efficient strategies that allow you to maximize the growth and distribution of your investments. Enter the Nationwide Monument Advisor, a unique variable annuity that we regularly recommend as a strategic tool for tax planning. But wait—if you’ve ever been hesitant about variable annuities, you’re not alone. Traditionally, they come with high fees and other drawbacks that make them less attractive. However, this product breaks the mold, offering unique advantages for those looking to reduce their tax burdens while securing retirement income.
In this blog, we’ll dive into the details of how the Nationwide Monument Advisor works, why it differs from other variable annuities, and how it fits into your overall tax planning strategies. Whether you’re managing a brokerage account, optimizing retirement planning tools, or simply looking for ways to defer taxes and improve your investment returns, this innovative product could be the missing piece in your financial puzzle.
What Is the Nationwide Monument Advisor?
The Nationwide Monument Advisor is a variable annuity designed to provide tax deferral on non-IRA, non-qualified funds. Unlike traditional variable annuities, which often carry high costs, this product is affordable and highly flexible. Here’s a quick breakdown of how it works:
Tax Deferral: Contributions to this annuity grow tax-deferred, meaning you won’t pay taxes on gains or interest until you withdraw the funds.
Investment Options: The product offers over 350 fund choices, enabling you to mirror a typical brokerage account’s investment strategy.
Low Fees: At just $20 per month ($240 annually), the Monument Advisor eliminates the high administrative and rider costs typically associated with variable annuities.
Liquidity: It offers full liquidity from day one, with no surrender charges, allowing you to withdraw your funds anytime without penalty.
This combination of features makes the Nationwide Monument Advisor an attractive option for individuals seeking tax-efficient investments without the drawbacks of traditional annuities.
Why Consider a Variable Annuity for Tax Planning?
For years, variable annuities have been viewed skeptically due to their high fees, which can range from 2% to 5% annually. These fees often erode investment performance, making them less appealing compared to other investment vehicles. However, the Nationwide Monument Advisor changes the game by removing these excessive costs while retaining the benefits of tax deferral.
Who Should Consider This Product?
If you have a brokerage account with significant unrealized gains or are managing non-qualified assets, this product could simplify your tax situation. It’s particularly beneficial if:
You want to avoid paying taxes on dividends, interest, or capital gains.
You’re considering Roth conversions and need to reduce taxable income.
You’re looking for flexibility in managing your portfolio without triggering taxable events.
How Does Tax Deferral Work?
Imagine you’ve invested $100,000 in a brokerage account. Over time, it grows to $200,000. In a traditional account, you’d owe taxes on dividends, interest, and any gains realized during rebalancing. However, by moving these assets into the Nationwide Monument Advisor, you can defer taxes on that growth until withdrawal. This tax deferral allows your investments to grow more efficiently, compounding returns without the drag of annual tax payments.
Additionally, the product offers significant advantages for retirement income planning, as you can control when and how you withdraw funds to manage your tax liability strategically.
The Costs: A Game-Changer in the Annuity World
Traditional variable annuities come with several layers of fees, including:
Administrative charges
Mortality and expense risk fees
Rider fees for optional benefits
Investment management fees
These costs often total 2%–4% annually, significantly reducing your net returns. By contrast, the Nationwide Monument Advisor charges a flat $20 per month—regardless of your account balance. Whether you invest $50,000 or $1 million, your cost remains $240 per year, making it one of the most cost-effective options in the industry.
Liquidity and Flexibility
Another standout feature of this product is its 100% liquidity from day one. Unlike most annuities, which impose surrender charges for early withdrawals, the Nationwide Monument Advisor allows you to access your funds anytime without penalty. This flexibility ensures your money remains available for unexpected expenses or changes in your financial strategy.
Fixed vs. Variable Annuities: Understanding the Differences
When discussing annuities, it’s essential to understand the differences between fixed and variable annuities. Here’s a quick comparison:
Feature
Fixed Annuity
Variable Annuity (Monument Advisor)
Risk
Low (guaranteed principal)
Moderate to High (market-dependent)
Fees
Low
Minimal ($240 annually)
Tax Deferral
Yes
Yes
Liquidity
Limited (surrender charges)
Full liquidity from day one
Investment Growth
Fixed interest rate
Market-driven, with higher growth potential
For those seeking growth potential and tax efficiency without high fees, the Nationwide Monument Advisor offers the best of both worlds.
Case Studies: Real-Life Applications
To illustrate how this product can work for you, let’s explore two common scenarios:
1. Managing Embedded Gains in a Brokerage Account
A client with $500,000 in a brokerage account had significant unrealized gains in several long-held stocks. Selling these positions would trigger substantial capital gains taxes, so the client felt “handcuffed” to underperforming investments. By transferring the funds into the Nationwide Monument Advisor, the client gained the freedom to rebalance their portfolio without immediate tax consequences. This flexibility allowed them to shift into higher-performing investments while deferring taxes on the gains.
2. Reducing Taxable Income for Roth Conversions
Another client wanted to execute Roth conversions but was concerned about the additional taxable income generated by dividends and capital gains from their brokerage account. By moving these assets into the Monument Advisor, they eliminated these taxable events, creating a cleaner tax return and allowing them to optimize their Roth conversion strategy.
Advantages for Beneficiaries
One question we often receive is, “What happens to this account when I pass away?” The answer is simple: Your beneficiaries inherit the funds and have options for managing their tax liability. They can take the entire balance as a lump sum, paying taxes on the gains immediately, or opt for a more tax-efficient approach by withdrawing the funds over several years. Unlike IRAs, there’s no mandatory 10-year withdrawal rule, providing greater flexibility for estate planning.
Who Should Avoid This Product?
While the Nationwide Monument Advisor offers numerous advantages, it may not be suitable for everyone. For example:
Investors under age 59½ may face a 10% penalty on early withdrawals, per IRS rules.
Those seeking guaranteed principal protection should consider fixed annuities
If you have no need for tax deferral (e.g., if all your assets are in IRAs or 401(k)s), this product may not add value.
Is the Nationwide Monument Advisor Right for You?
The Nationwide Monument Advisor is an innovative tool for tax planning strategies, particularly for those managing brokerage account taxes or seeking tax-efficient investments. Its low costs, tax deferral benefits, and flexibility make it a powerful option for improving your retirement income planning and ensuring you’re prepared to retire comfortably.
If you want to understand all this a little better, we offer a complimentary phone call that you can schedule with us on our website. If we can’t answer all your questions in just 15 minutes, we’ll guide you to the next steps to find the answers you need.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for November 25, 2024
Radon and Murs discuss the fascinating journey of transitioning into retirement with special guest Dr. Ridley Moynes, author of The Four Phases of Retirement. This episode dives deep into the emotional, mental, and financial aspects of retirement, addressing the critical question: “Is retirement only about money, or is there more to finding purpose in retirement?”…
We talked to Dr. Riley Moynes, author of The Four Phases of Retirement, and he takes a unique approach to understanding this pivotal stage of life. While money remains a critical component of retirement planning, Moynes emphasizes the need to address the deeper, often-overlooked challenges…..
Retirement. It’s a word that stirs up images of freedom, relaxation, and maybe even the long-dreamed-of beach house. But while most of us imagine retirement as the ultimate escape from work, the reality can be far more complex. Transitioning from decades of structured routines and professional identity to a life of open-ended days isn’t as straightforward as it seems. In fact, retirement is more than just a financial milestone—it’s an emotional, psychological, and social transformation.
We talked to Dr. Riley Moynes, author of The Four Phases of Retirement, and he takes a unique approach to understanding this pivotal stage of life. While money remains a critical component of retirement planning, Moynes emphasizes the need to address the deeper, often-overlooked challenges. What will your purpose be? How will you handle the loss of structure and identity that work once provided? And perhaps most importantly, how can you squeeze all the juice out of retirement? Let’s delve into these four phases of retirement to uncover not just how to retire comfortably, but how to thrive in life after retirement.
Phase One: The Vacation Phase
Imagine waking up without an alarm, sipping coffee on your patio, and spending your days doing whatever you please. This is the essence of the Vacation Phase, the period many retirees envision when they think about retirement. It’s a time of indulgence, relaxation, and often ticking off items on a long-held bucket list.
For most, this phase lasts between one and two years. While it’s a well-deserved respite after decades of hard work, it doesn’t last forever. As the novelty wears off, many retirees find themselves asking, Is this all there is to retirement? This marks the transition to the next phase.
Phase Two: Feeling Lost
The second phase, aptly called Feeling Lost, is when the initial excitement of retirement fades. This stage can come as a shock, particularly for those who assumed retirement would be an enduring carefree coast. According to Dr. Moynes, retirement is ranked among life’s top 10 traumas, often characterized by:
Loss of Structure: Without the daily grind, retirees may miss the routine that once anchored their lives.
Loss of Identity: Work often forms a large part of who we are, and stepping away can feel like losing a part of oneself.
Loss of Relationships: Colleagues who became friends may drift away once the common bond of work is gone.
Loss of Purpose: The sense of contributing to something meaningful can be difficult to replace.
Loss of Power: Retirees who once held significant roles may feel diminished when those responsibilities vanish.
Adding to these challenges are the “three D’s” that often coincide with this stage of life: decline (physical and mental), depression, and divorce. For some, this phase can feel overwhelming and endless, but it’s also a critical turning point. Recognizing these challenges and how they could affect you is an important step on your path to building a fulfilling and comprehensive retirement.
Phase Three: Trial and Error
If Phase Two is the lowest point, Trial and Error is the climb back up. This phase is about exploration—testing new ideas, hobbies, and ways to regain a sense of purpose. It’s not an easy process; retirees may try several activities that fail to stick before finding what truly resonates.
Key strategies for navigating this phase include:
Rediscovering Purpose: Ask yourself, What makes me want to get up in the morning?
Leveraging Past Successes: Reflect on personal victories and identify patterns that could guide your next steps.
Staying Persistent: Trial and error is exactly that—trying and failing until you succeed.
For example, volunteering, mentoring, or taking up part-time work can help retirees reconnect with a sense of service and contribution. The key is not to give up; those who persist are far more likely to transition successfully to the final phase.
Phase Four: Reconnection and Service
The final phase, Reconnection and Service, is the reward for perseverance. Dr. Moynes describes this as the phase where retirees truly thrive, finding immense satisfaction in giving back and living with purpose.
Common ways retirees find fulfillment in this phase include:
Volunteering with charities or community organizations
The defining characteristic of this phase is a commitment to serving others. Whether it’s mentoring, helping a local charity, or being a present and engaged family member, this outward focus brings deep personal satisfaction.
Preparing for the Journey: Practical Tips
Retirement isn’t just about financial planning steps; it’s about planning for a fulfilling life after retirement. Here are some actionable retirement tips to ease the transition:
Start Early: Don’t wait until retirement to think about these phases. Begin considering your unique abilities, passions, and potential challenges well in advance.
Communicate with Your Partner: Retirement can test relationships, especially if one or both partners struggle with the changes. Open communication is essential for navigating this together.
Stay Active: Physical and mental decline is natural but can be mitigated by staying active, both in body and mind.
Seek Support: Whether through books like The Four Phases of Retirement or workshops, don’t hesitate to seek guidance in navigating these stages.
Squeezing the Juice Out of Retirement
Retirement is a journey, not a destination. It’s a series of phases containing their own challenges and rewards. By understanding these four phases, retirees can better prepare for the emotional and psychological hurdles that accompany financial planning. With persistence and a willingness to adapt, it’s possible to transition from feeling lost to living a purposeful and joyful life.
You may have some questions about this topic. Schedule your 15 minute complimentary call with us and learn more about The Four Phases of Retirementhere.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for November 18, 2024
How Much Money Do I Need Saved to Spend 10,000 Per Month in Retirement?
Radon and Murs discuss the question many retirees and pre-retirees ask: “How much money do I need saved to spend $10,000 per month in retirement?” This is a highly specific question that requires a tailored approach to retirement planning. Radon and Murs reverse engineer this scenario…
How Much Money Do I Need Saved to Spend 10,000 Per Month in Retirement?
Retirement is something many of us dream about after years of hard work and diligent saving. One of the biggest questions that might come to mind as retirement approaches is, “How much do I really need to save to enjoy the lifestyle I want?” Specifically, you might be wondering how much money you’d need in savings and investments to spend $10,000 per month in retirement….
Retirement is something many of us dream about after years of hard work and diligent saving. One of the biggest questions that might come to mind as retirement approaches is, “How much do I really need to save to enjoy the lifestyle I want?” Specifically, you might be wondering how much money you’d need in savings and investments to spend $10,000 per month in retirement.
We’re here to help answer that question by breaking down the numbers, exploring different planning strategies, and addressing key factors that could affect your savings goal. From Social Security to inflation, sequence of returns risk, and more, we’ll guide you through the considerations to help you build a reliable retirement income. By the end of this blog, you’ll have a clearer picture of the steps needed to secure your retirement and achieve peace of mind.
Understanding Your Spending Needs
The first step is to determine your retirement spending goals. Let’s say you’ve worked hard, saved consistently, and want to spend $10,000 monthly in retirement. To achieve this goal, you’ll need to factor in Social Security, other income sources, and your savings strategy. For example, if Social Security benefits cover $6,000 of that total, you’ll need to find a way to generate the remaining $4,000 monthly. This is where personalized retirement planning becomes essential.
How Much Do You Need to Save?
To figure out how much to save, we can apply the 4% rule for retirement. This rule suggests that retirees can withdraw 4% of their retirement portfolio per year without depleting their savings over a 30-year retirement. It’s a good starting point, though not a one-size-fits-all solution.
Based on this rule; to generate $48,000 annually ($4,000 per month) after Social Security, you would need a retirement portfolio of roughly $1.2 million. This calculation assumes a 4% withdrawal rate. However, due to factors like market volatility and inflation, some experts recommend using a more conservative withdrawal rate, like 3% or 3.5%, which would increase the savings requirement to around $1.4 million.
Factors that Impact Your Monthly Budget
When planning to spend $10,000 per month in retirement, consider how factors like taxes, inflation, and market volatility will affect your financial security. Here’s a closer look at each:
Taxes: Whether you aim for a gross or net $10,000 can significantly impact your strategy. Funds from sources like a traditional IRA are taxed as ordinary income, while long-term capital gains from brokerage accounts might be taxed at a lower rate. Roth IRA distributions, on the other hand, can be tax-free, making your tax plan a key element in reaching your monthly income goal.
Inflation: Inflation gradually erodes purchasing power, making it essential to account for it in your retirement plan. A 3% annual inflation rate, based on a historical average, is typically used to project future expenses. This means that the $10,000 you aim to spend today will need to grow over time to maintain the same lifestyle. Personalized retirement planning can help you adjust for inflation and avoid underestimating your income needs.
Market Volatility and Sequence of Returns Risk: Market volatility can have a lasting impact, especially early in retirement. When you retire, a market downturn can reduce your portfolio’s value and make it challenging to sustain your desired income without overspending. This risk, known as sequence of returns risk, is why some retirees use a diversified approach to protect their income, such as combining “growth” and “safety” buckets.
Mitigating Sequence of Returns Risk
Sequence of returns risk refers to the potential loss of funds due to withdrawals during a market downturn, especially early in retirement. Imagine you’ve saved $1 million and are withdrawing 4% each year. If the market declines by 20% shortly after you retire, the impact could be lasting, as you’re drawing from a declining balance without time for recovery.
One effective way to combat this is through a two-bucket approach: a growth bucket and a safety bucket.
The growth bucket contains market-exposed investments that grow over time but come with some risk. This bucket can yield higher returns but should be left untouched during market downturns.
The safety bucket is for short-term needs, holding principal-protected assets that grow steadily. By drawing from this bucket during market lows, you avoid selling assets at a loss, preserving your growth bucket’s potential.
Balancing Your Retirement Goals with Lifestyle Needs
Personalized retirement planning isn’t solely about math. It’s also about aligning your savings strategy with your desired lifestyle. For instance, if you want to travel extensively in the first decade of retirement, you might initially need a higher budget. Many retirees anticipate a decrease in spending as they age, assuming they’ll eventually travel less. Adjusting your spending expectations over time can be a valuable approach to retiring comfortably.
Creating Your Peace of Mind Pathway
Retirement planning involves more than setting a savings goal. It’s a retirement checklist that includes investment planning, tax planning, and estate considerations. With a comprehensive and structured approach, you can optimize each part of your retirement to secure your peace of mind. Our Peace of Mind Pathway simplifies retirement planning into clear, actionable steps, allowing you to focus on your priorities, like family, travel, and personal goals. This pathway considers:
Investment Planning: Ensuring a well-diversified portfolio to balance risk and growth.
Tax Planning: Creating tax-efficient withdrawal strategies to minimize liabilities.
Healthcare Planning: Addressing potential medical costs and insurance needs.
Estate Planning: Protecting your legacy and ensuring your assets are distributed according to your wishes.
When to Start Thinking About Retirement
If you’re wondering, “Is it time to retire?” or “When should I retire?”, a good starting point is an analysis of your financial readiness, lifestyle goals, and health. Retirement planning is a personal journey, and having a strategy that adapts to your needs is vital to secure your retirement.
The Role of Professional Guidance
Every retiree’s situation is unique, which is why personalized retirement planning is essential. There’s no universal answer to questions like “What is the 4% rule of retirement?” or “How do I manage budgeting on social security?” Consulting a professional to help analyze your expenses, determine optimal withdrawal rates, and implement strategies to address risks like inflation and market downturns is a good start for many in retirement planning.
If you have some questions about how this may fit your situation, schedule a 15 min call with us on our website. If we can’t answer all your questions in just 15 minutes, we’ll guide you to the next steps to find the answers you need.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for November 11, 2024
Radon Stancil and Murs Tariq discuss the often-overlooked potential of annuities as a vital component of retirement portfolios. With fluctuating interest rates and persistent market volatility, it’s essential to consider alternatives like fixed index annuities to help manage stock market risk and secure retirement income.
Retirement planning is an intricate process that often revolves around balancing growth and stability. Many retirees face a challenging question: how do you achieve steady income and maintain peace of mind without overexposing yourself to the volatility of the stock market? Traditionally, the 60/40 portfolio (60% equities and 40% bonds) has served as a popular solution, offering both growth potential and a measure of risk management. However, the financial landscape is changing. ….
Retirement planning is an intricate process that often revolves around balancing growth and stability. Many retirees face a challenging question: how do you achieve steady income and maintain peace of mind without overexposing yourself to the volatility of the stock market? Traditionally, the 60/40 portfolio (60% equities and 40% bonds) has served as a popular solution, offering both growth potential and a measure of risk management. However, the financial landscape is changing. With recent economic fluctuations and shifts in interest rates, many retirees find that bonds, once the go-to asset for stability, may no longer provide the reassurance they once did.
This is where annuities, particularly fixed index annuities, enter the picture. As an asset class, annuities offer a unique blend of stability and income potential, creating an alternative to traditional bonds in retirement portfolios. Fixed index annuities, specifically, are gaining traction as a viable addition or replacement to the bond portion of retirement portfolios. They present a way to protect against stock market risk while also offering reliable retirement income strategies that are not solely dependent on fluctuating bond yields. Let’s explore how annuities work as an asset class, their benefits and limitations, and why they may be worth considering in today’s retirement planning landscape.
Understanding Annuities as an Asset Class
Annuities can be structured to provide steady income, much like bonds, but they also offer additional benefits that traditional bonds cannot. Fixed index annuities (FIAs) are designed to provide market-linked growth without directly exposing your principal to stock market losses. This feature can be especially valuable in volatile markets, making FIAs a compelling alternative to bonds.
The idea of annuities as an asset class is not new. However, the financial environment we’re in—marked by inflation and fluctuating interest rates—has brought annuities into focus as a stable, income-generating component for retirement. As inflation rises, the purchasing power of your money diminishes, which is particularly concerning for retirees on fixed incomes. Meanwhile, rising interest rates, intended to curb inflation, can negatively impact bond prices, leading to potential losses in bond-heavy portfolios. In contrast, a fixed index annuity offers a way to lock in rates and secure a steady income stream for years, irrespective of market conditions.
The 60/40 Portfolio: A Changing Strategy
The classic 60/40 portfolio has long been a staple in retirement planning, balancing stocks and bonds to create a stable yet growth-oriented investment mix. Stocks provide growth, while bonds, with their traditionally lower volatility, serve as a cushion during stock market downturns. But as we’ve seen in recent years, bonds are not immune to risk. For instance, in 2021, the Aggregate Bond Index (AGG), a commonly used benchmark, saw a significant decline, challenging the assumption that bonds always offer stability.
Economic forces have made it difficult to rely solely on the 60/40 strategy. Inflation pressures and rapidly changing interest rates have placed bonds under stress, diminishing their role as a haven. This volatility has led financial professionals to seek out other avenues, like annuities, that can provide a similar buffer against stock market fluctuations without relying on the bond market.
Fixed Index Annuities: A Bond Alternative
In the face of bond market volatility, fixed index annuities (FIAs) present an attractive alternative. FIAs offer protection against loss while giving you the opportunity to grow your money based on the performance of a market index. Unlike direct investments in stocks, FIAs are not subject to market downturns. Instead, they offer a guaranteed minimum interest rate, meaning your investment can never drop below a certain value. This stability makes FIAs an appealing option for those who want to secure retirement income while managing stock market risk.
Another advantage of FIAs is their adaptability. With bond yields under pressure, FIAs allow retirees to lock in high-interest rates for extended periods—sometimes as long as 10 years. This is particularly appealing in today’s environment of high rates, as it offers long-term income security. Instead of worrying about bond prices falling as rates rise, you can rely on the predictable income that an FIA provides, which can be invaluable for retirees looking to plan for a stable future.
How Fixed Index Annuities Manage Market Risk
Many retirees worry about the potential downsides of staying too heavily invested in the stock market, especially as they begin withdrawing from their retirement savings. History shows us that the stock market can go through periods of significant decline. For example, during certain downturns, the S&P 500 has experienced drops of up to 58%. For a retiree withdrawing income during such a downturn, the impact on their portfolio can be severe, jeopardizing their financial stability in retirement.
Fixed index annuities help mitigate this risk by offering a guarantee that the value of the annuity will not decrease due to market performance. This means that even if the market experiences a decline, your annuity value remains unaffected. Additionally, FIAs often have options for income riders, which ensure that you receive consistent income even if the underlying market index underperforms. This feature aligns with retirement income strategies that focus on reducing risk while providing consistent income.
Comparing Returns: Traditional vs. FIA-Integrated Portfolios
One of the most significant questions around incorporating annuities as an asset class is whether they provide comparable returns to traditional portfolios. Historically, a 60/40 stock-bond portfolio has delivered around 6.5% annualized returns over a 10-year period. By integrating an FIA into this mix—essentially replacing the bond component—the return potential can increase, often reaching around 10.1% annualized, depending on market conditions and the specifics of the annuity.
This improvement is largely due to the fact that FIAs allow you to benefit from market-linked growth without exposing your principal to losses. By diversifying with FIAs, retirees can create a balanced portfolio that maintains a measure of growth potential while also reducing downside risk, a crucial consideration when nearing or entering retirement.
The Role of Annuities in Retirement Income Strategies
One of the core goals of retirement planning is to ensure a stable income throughout your retirement years. Annuities are uniquely positioned to achieve this. FIAs provide a structured way to generate income, often at higher rates than traditional bonds, and without the market’s fluctuations impacting the income stream. For retirees, this translates to a more predictable income source, even in times of economic uncertainty.
Incorporating FIAs as part of retirement income strategies not only mitigates risk but also allows retirees to focus on enjoying their retirement without worrying about their next financial downturn. Moreover, FIAs are not subject to the same risks as other fixed-income investments, making them particularly valuable for those concerned with stock market risk management.
Building a Comprehensive Plan with Fixed Index Annuities
A sound retirement plan considers more than just growth; it looks at how to control volatility, manage risk, and ensure long-term income security. By diversifying with FIAs, retirees can achieve a balance between growth and stability that is often difficult to find in traditional portfolios. FIAs allow retirees to tap into market growth without risking principal, providing a “safe” asset that generates income even in fluctuating markets.
While FIAs are an appealing option, they are not a one-size-fits-all solution. Some retirees may still find bonds useful, particularly in combination with other assets. However, for those looking for alternatives to traditional bonds, FIAs offer a promising solution.
Final Thoughts
As retirement planning evolves, so do the tools and strategies available to secure a comfortable retirement. Fixed index annuities present a unique opportunity to enhance your portfolio, providing both stability and growth potential in a way that traditional bonds may no longer guarantee. Given the current economic environment, exploring options like FIAs can give retirees greater control over their retirement income, helping them avoid the risks of both the stock and bond markets.
If you want to understand all this a little better, we offer a complimentary phone call that you can schedule with us on our website. If we can’t answer all your questions in just 15 minutes, we’ll guide you to the next steps to find the answers you need.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for November 4, 2024
Estate Planning 101 – The Importance of a Letter to Your Heirs in Retirement
Radon and Murs discuss the often overlooked but crucial topic of creating a letter to your heirs. This letter serves as an essential supplement to your estate planning documents and plays a significant role in ensuring a smooth transition for your loved ones. The episode highlights how this thoughtful approach can simplify the process, ease emotional stress, and transfer the peace of mind you’ve enjoyed during your retirement planning to your heirs.
Estate Planning 101 – The Importance of a Letter to Your Heirs in Retirement
Estate planning is a topic that many people shy away from, but it’s one of the most significant discussions you can have for your family’s future. When it comes to planning your estate, most think of essential documents like a will or a trust. However, there is an often overlooked, yet highly valuable, component of estate planning—a personal letter to your heirs. This letter acts as a ….
Estate planning is a topic that many people shy away from, but it’s one of the most significant discussions you can have for your family’s future. When it comes to planning your estate, most think of essential documents like a will or a trust. However, there is an often overlooked, yet highly valuable, component of estate planning—a personal letter to your heirs. This letter acts as a bridge between your formal documents and the emotional and practical guidance your loved one’s need during a challenging time.
Imagine the difficulty of navigating through the complexities of an estate without clear directions. Your heirs will be dealing with grief, confusion, and possibly overwhelming tasks as they sort through financial and legal matters. A thoughtfully crafted letter can provide them with clarity and reassurance, making an already tough process a little more bearable. In this blog, we will explore why a letter to your heirs is a important part of estate planning, how it can offer peace of mind, and what key elements you should include to ensure your family can manage your affairs smoothly.
The Importance of a Letter to Your Heirs
When we discuss estate planning, we often focus on the tangible documents: the will, durable power of attorney, health care power of attorney, HIPAA forms, and possibly a revocable living trust. While these documents are crucial and legally binding, they can be daunting to an executor or trustee when the time comes to act. A letter to your heirs serves as a guide, summarizing your estate plan and providing personal insights that can help ease their journey.
A personal letter can convey your wishes in a compassionate, straightforward manner. For instance, it could start with a simple statement: “I am writing this letter to help you understand the plans I’ve put in place.” This opening sets a tone of support and helps your heirs feel that everything is under control, even in your absence.
Laying Out Your Estate Plan
Your letter should offer a clear overview of your estate plan. Start by listing the essential documents you have prepared, such as:
Will
Revocable living trust
Make sure to state where these documents can be found and introduce the primary contacts to accessing them. Including this information can save your heirs from having to dig through paperwork or making frantic phone calls during an emotional time.
It is also wise to mention the professionals who have helped you with your planning. For example, “I have worked with Peace of Mind Wealth Management to set up a comprehensive plan covering all aspects of my estate. They are available to assist you and answer any questions.” This kind of direction reassures your heirs that there are experts ready to guide them.
Investment accounts: Specify which brokerage firm holds them and reassure your heirs that beneficiary designations are in place to avoid probate.
Retirement accounts: List any traditional IRAs, Roth IRAs, or other types of accounts and confirm that they have designated beneficiaries.
Bank accounts: Mention checking and savings accounts and clarify that you have set up Transfer on Death (TOD) or Payable on Death (POD) instructions where applicable.
These details help ensure that your heirs don’t need to navigate a complex probate process for assets that can otherwise transfer directly to them.
Providing Context and Avoiding Pitfalls
The letter should also caution your heirs about potential mistakes that could lead to tax issues or other financial setbacks. For example, withdrawing funds from certain retirement accounts too quickly could lead to significant tax consequences. Including a reminder like, “Before taking any action, consult with a financial advisor to understand the implications,” can be invaluable.
Explain the different types of assets and their tax implications:
Some assets may be taxed when inherited, while others may not be.
There may be advantages to taking distributions over time rather than in one lump sum.
Your heirs should know who to contact for guidance. Mention that your wealth management firm or financial advisor has full knowledge of your estate plan. For instance, “Peace of Mind Wealth Management holds my peace of mind roadmap, which details every aspect of my financial and estate plan. They can help you navigate through each step of the process.”
In this digital age, you might have granted your heirs access to an online platform where all your estate planning documents are stored. Ensure they know how to access this information and the credentials needed, if any.
Real-Life Stories
We’ve seen firsthand how beneficial a letter to your heirs can be. In our work at Peace of Mind Wealth Management, clients who leave clear instructions often spare their loved ones from confusion and stress. On the other hand, we’ve also witnessed situations where heirs struggled to piece together the financial puzzle, needing to sift through bank statements, tax returns, and old paperwork to find answers. A well-crafted letter eliminates these issues, providing a roadmap that simplifies the process.
Final Reminders
End your letter with reminders about the importance of patience and thoroughness. Your heirs may be tempted to make quick decisions, especially when dealing with emotions and the complexities of inheritance. Reinforce the idea that consulting with professionals before acting on financial matters can save them from potential pitfalls.
“Some assets are taxed differently upon inheritance,” you might write. “Taking time to assess your options and understand the financial landscape will help you maximize your inheritance and minimize tax burdens.” This simple piece of advice can have a significant impact on their financial well-being.
Hearing from you about your estate and financial plan can be emotional, but also reassuring, grounding, and comforting to your heirs as they navigate your wishes and instructions. While the letter may be difficult for you to write, it will create a lasting impact on your heirs and those assisting them.
Schedule Your Complimentary Call
If you have some questions about writing a letter to your heirs, we’d love for you to schedule a 15min call to start a conversation.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for October 28, 2024
Medicare AEP in Retirement – 5 Things You Need to Know
Radon and Murs discuss the critical aspects of the Medicare Annual Enrollment Period (AEP) with Medicare Specialist, Shawn Southard. As we dive into Medicare AEP 2024, they explore why reviewing your current plan is crucial and how it may impact your healthcare costs, coverage, and provider networks. Shawn provides actionable Medicare enrollment tips that could save you money and ensure you have the right coverage for your needs.
Medicare AEP in Retirement – 5 Things You Need to Know
Medicare Annual Enrollment Period (AEP, October 15 to December 7, is one of the most critical times of the year for anyone who is eligible for Medicare. With the constantly evolving healthcare landscape, it’s crucial to understand your options and make informed decisions that align with your health and financial needs. Whether you’re already on Medicare or you’re about to turn 65 and eligible for the first time, the AEP offers a window of opportunity to review and adjust your healthcare coverage for the coming year….
Medicare Annual Enrollment Period (AEP, October 15 to December 7, is one of the most critical times of the year for anyone who is eligible for Medicare. With the constantly evolving healthcare landscape, it’s crucial to understand your options and make informed decisions that align with your health and financial needs. Whether you’re already on Medicare or you’re about to turn 65 and eligible for the first time, the AEP offers a window of opportunity to review and adjust your healthcare coverage for the coming year.
But here’s the challenge: with all the choices, costs, and changes, how do you make sure you’re in the right plan? Are you prepared for potential Medicare plan changes in 2024, or aware of how your prescription drug coverage may be impacted? This blog will walk you through five essential tips you need to know during the Medicare AEP for 2025 so you can confidently choose the plan that’s best for you.
1. Review Your Current Coverage
Even if you feel comfortable with your current Medicare plan, it’s good practice to review it every year during AEP. Why? Medicare Advantage plans and prescription drug plans, also known as Part D plans, can change yearly. The insurance providers that offer these plans often update aspects such as premiums, copayments, coverage limits, and even provider networks.
In other words, you may have chosen a plan that was best for you in 2023 based on the options available. However, different options in 2024 may be even better, and how would you know without a yearly review? Insurance companies send out an “Annual Notice of Change” (ANOC) before AEP starts. This document will allow you to compare side-by-side what your plan currently offers and what will change in the following year. Be sure to review it carefully and bring it with you if you meet with a Medicare specialist. Making small adjustments could save you hundreds or even thousands of dollars over time.
2. Evaluate Your Costs
When it comes to Medicare, cost is often the determining factor in selecting a plan. However, the lowest-cost plan may not always provide the coverage you need. Medicare Advantage plans often come with varying premiums, deductibles, copays, and coinsurance amounts. Even plans that previously had a zero premium may introduce new costs in 2025.
For instance, in some cases, a $0 premium plan may start charging $15 or more monthly. Copayments for routine visits to primary care physicians could rise from $25 to $35, or the maximum out-of-pocket (MOOP) for 2025 could increase. This MOOP is the most you’ll have to pay for covered healthcare services within a year, and in 2025, the maximum out-of-pocket for Medicare Advantage plans is set at $9,400, significantly impacting those who may need extensive care.
If you are on a Medicare Part D drug plan, pay close attention to changes in the plan’s cost structure. Premiums may rise, or the tier system used for prescription drugs could shift, leading to higher out-of-pocket costs for your medications. Regularly reviewing and comparing plans can help ensure you’re getting the best value without sacrificing essential coverage.
3. Consider Added Benefits Beyond Medical
Medicare is not just about hospital and doctor visits—it also involves other valuable services such as dental, vision, hearing, and even fitness memberships. These additional benefits are often found in Medicare Advantage plans, but they can change yearly as well.
Some plans may scale back or eliminate certain benefits altogether. For example, a plan that included dental or vision coverage in 2024 may no longer offer those benefits in 2025. In some areas, Medicare Advantage plans include wellness programs like SilverSneakers, which offers gym memberships and fitness programs specifically for seniors. If these types of benefits are important to you, make sure they are still available in your chosen plan for the upcoming year. If not, you may want to switch to a plan that better meets your needs.
For those with Medigap (Medicare Supplement) plans, discounts on services like dental, vision, or hearing might not be part of the policy but can often be included as additional perks. This is why reviewing the fine print is essential during AEP.
4. Check Provider Networks
If you’re enrolled in a Medicare Advantage plan, your coverage is typically limited to a specific provider network. These plans often operate as Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). Unlike Original Medicare, where you can visit any doctor or hospital that accepts Medicare, Medicare Advantage plans can limit your choices to specific healthcare providers.
Because these networks can change from year to year, it’s essential to confirm that your doctors and hospitals will continue to be in-network for the coming year. If a major provider leaves your plan’s network, you could end up paying significantly more out of pocket or being forced to switch doctors. Make sure to check that your preferred providers, especially if you have upcoming surgeries or treatments planned, will still be covered under your plan in 2025.
5. Review Prescription Drug Coverage
Medicare Part D plans, which cover prescription drugs, also change from year to year. In 2025, there are significant changes that will impact many Medicare beneficiaries. The maximum out-of-pocket (MOOP) for prescription drug coverage will drop significantly from $8,000 to $2,000. Once you reach this MOOP, you will pay $0 for covered prescriptions for the rest of the year, which is a massive benefit for those on expensive, brand-name medications without generic alternatives.
However, this reduction in out-of-pocket costs comes at a price for insurance companies, which will now be responsible for a larger share of prescription drug costs under the catastrophic coverage phase. As a result, premiums for Part D plans are expected to rise, in some cases by as much as 24%. This means that even if you’ve been happy with your current plan, you need to compare the new premiums and check whether your medications will still be covered at the same tier.
Additionally, drug formularies—the list of drugs covered by a plan—can change each year. If a drug you rely on moves to a higher tier, it could increase your out-of-pocket costs. Taking the time to compare plans and ensuring your medications are covered is crucial to avoid surprises at the pharmacy in 2025.
The Importance of Working With a Medicare Specialist
Navigating the complexities of Medicare can be overwhelming. Working with a Medicare specialist can make the process significantly easier. A specialist can guide you through the Medicare enrollment periods explained and ensure that you choose the right plan that fits your medical and financial needs.
At Peace of Mind Wealth Management, our team, including our Medicare Specialist Shawn Southard, is available to help you understand your options and ensure you are prepared for the upcoming year. Whether you’re a current client or new to us, you can schedule a complimentary phone call with Shawn or one of our advisors to review your Medicare plan and make sure it’s the best fit for you in 2025.
Schedule your complimentary call with us and learn more about “Medicare AEP 2025: 5 Things You Need to Know.” Remember, Medicare Annual Enrollment Period (AEP) is October 15th to December 7th.
By taking the time to review your coverage during the Medicare AEP, you can ensure that you’re getting the best value for your healthcare needs while securing your retirement plans and peace of mind.
We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
Portfolio Update: Murs and I have recorded our portfolio update for October 21, 2024
Andrew Opdyke – 2024 – 3rd Quarter Economic Update for Retirement
Radon and Murs discuss the state of the U.S. economy with insights from Andrew Opdyke, an economist for First Trust Investments. As we approach the end of 2024, Andrew shares his expert outlook on critical economic trends, including the Federal Reserve’s recent rate cuts, the potential impact of the upcoming elections, and the ongoing geopolitical risks that could shape the year ahead.
As we near the end of 2024, many questions loom over the state of the U.S. economy. From inflation concerns to geopolitical risks, as well as the ongoing technological advancements in artificial intelligence (AI), there is much to digest. This is where insights from experts like Andrew Opdyke, an economist, become invaluable….
