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How much will you need to maintain your standard of living in retirement?
Retirement is not a “one size fits all” proposition. Everyone has a unique idea of how to spend time in retirement in a way that’s enjoyable and personally fulfilling.
The key to a secure retirement is to start early and save often to benefit from many decades of compounding investment returns. Our fee only, flat fee retirement planning services and low-cost investment portfolio options can give you the best possible opportunity to achieve your retirement goals and maintain your lifestyle throughout your retirement years.
Are you saving enough?
When you are beginning to save for retirement you'll have a lot of questions, such as:
- I want to retire on time. How much should I save every year?
- What is the right asset allocation for my retirement goals?
- What types of retirement accounts would make the most sense for me from a tax perspective?
- What is a Roth IRA account? Am I able to contribute to one?
- What percentage of my income should I be contributing to my employer's retirement plan?
- Should I convert my traditional IRA to a Roth IRA?
- Should I put more money towards my mortgage?
- How can I save for retirement and my child's college education?
Are you approaching retirement or already retired?
If you are preparing for retirement or are already retired, you have probably asked yourself the following questions:
- Have I saved enough to retire?
- How do I move my money from my employer's retirement plan without incurring taxes?
- How can I consolidate my accounts to simplify my finances?
- How much can I safely withdraw from my investment portfolio each year?
- Should I take my Social Security benefits now or wait?
- Will I be able to maintain my current standard of living?
- How can a Roth Conversion help me reduce my Required Minimum Distributions (RMDs)?
- What are my options for meeting my Required Minimum Distributions?
We begin with your current monthly expenses.
With the prospect of paying for retirement needs for as many as 30 years, retirees need to be concerned with maintaining their standard of living. First, we will ask you about your current monthly expenses, outstanding debt, and expected future expenses such as travel, relocation, home repair, new purchases, etc. Then we evaluate all of your sources of income such as employer-sponsored retirement plans, including 401(k) and 403(b) plans, Social Security, pensions, annuities, rental property, and investment assets. Your plan will incorporate your tax situation based on the assistance of your tax professional. Ultimately, we define success as producing a long-term plan that will last a lifetime.
Consider Delaying Social Security
Some Important Social Security Numbers
The table below shows the Social Security Full Retirement Age by year of birth along with the impact of taking benefits at ages 62 and 70. As of 2018, the maximum full retirement age starting annual benefit for someone born in 1952 is $33,456. For someone born in 1948, the maximum age 70 benefit is $44,162. These amounts can be reduced by $1,608 for the Medicare Part B premium.
Planning for the transfer of assets at death is a critical element of retirement planning especially if there are survivors who are dependent upon the assets for their financial security. Planning for estate transfer can be as simple as drafting a will, which is essential to ensure that assets are transferred according to the wishes of the decedent. Larger estates may be confronted with settlement costs and sizable death taxes which could force liquidation if the proper planning is not done.
Health Care Needs
Longer life spans can also translate into more health issues that arise in the process of aging. The federal government provides a safety net in the form of Medicare, however, it may not provide the coverage needed especially in chronic illness cases. Planning for long-term care, in the event of a serious disability or chronic illness, is becoming a key element of retirement plans today.
Important Retirement Contribution Limits for 2019
401(k)/403(b) Employer Retirement Plans
The maximum 401(k)/403(b) employee contribution = $19,000 (up from $18,500 in 2018) with a $6,000 age 50+ catch-up. Under certain circumstances, a 403(b) may qualify for an additional $3,000 catch-up.
IRAs and Roth IRAs
Contribution limit = $6,000 (up from $5,500 in 2018), with a $1,000 age 50+ catch-up.
Deductibility of Traditional IRA Contributions:
For single taxpayers with a workplace retirement plan, the deduction is phased out at MAGI of $64,000 to $74,000 (2018 range = $63,000 - $73,000).
For married couples filing jointly, where the IRA contributor is covered by a workplace plan, the deduction is phased out at MAGI of $103,000 to $123,000 (2018 range = $101,000 - $121,000).
For married couples filing jointly where the individual contributor is not covered by a plan, but their spouse is, the deduction is phased out at MAGI of $193,000 to $203,000 (2018 range = $189,000 - $199,000).
Eligibility of Roth IRA contributions:
For single taxpayers, the phaseout range is now $122,000 to $137,000 (2018 range = $120,000 - $135,000) . For married couples filing jointly, the income phase-out range is $193,000 to $203,000 (2018 range = $189,000 - $199,000).
SEP IRAs and Solo 401(k)s
For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) increases from $55,000 in 2018 to $56,000 in 2019. The compensation limit used in the savings calculation also increases from $275,000 in 2018 to $280,000 in 2019.
SIMPLE IRAs and 401(k)s
The contribution limit on SIMPLE retirement accounts is $13,000 (up from $12,500 in 2018) with a catch-up limit of $3,000.
Defined Benefit and Cash Balance Plans
The limitation on the annual benefit of a defined benefit or cash balance plan increases from $220,000 in 2018 to $225,000 in 2019.