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Category: Retirement Income Planning

Why Average Market Returns Mean Nothing

Why Average Market Returns Mean Nothing

David Hultstrom of Financial Architects puts out a great quarterly newsletter for financial advisors (and a great one for investors as well). In the most recent version of his advisor newsletter, he posted the following chart below with some great commentary that I wanted to share with you. The average compound return (i.e. geometric) is 9.75% (red line). Only in 1992 did an annual return round to 10%. In only 5 out of the 93 years was it even within…

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An Easy to Understand Guide to Required Minimum Distributions

An Easy to Understand Guide to Required Minimum Distributions

Despite the fact that Required Minimum Distributions (RMDs) impact everyone above age 70.5 with a tax-deferred investment account balance, there is still a surprising amount of confusion around the subject of RMDs and how to calculate the distribution required. Before I get to the actual calculation, I’ll briefly address some frequently asked questions about RMDs many retirees may be curious about. What is an RMD? This is the mandatory minimum withdrawal that must be taken from tax-deferred retirement accounts starting…

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Why I Choose to Focus on Helping Retirees

Why I Choose to Focus on Helping Retirees

Given that I focus exclusively on retirement planning for individuals, I am often asked the simple question, “Why?”. There are three primary reasons: (1) It’s needed. The American College conducted a retirement literacy quiz with over 1,200 Americans age 60-75 with at least $100,000 in household assets (not including their primary residence) and the results were putrid. • Retirement literacy remains low – 74% failed the 38-question retirement literacy quiz!• Roughly 5% of respondents scored a B or higher (80%+).•…

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10 Charts About Retirement Every Retiree Should See

10 Charts About Retirement Every Retiree Should See

As a Retirement Planner, I eagerly await the release of J.P. Morgan’s Guide to Retirement. It is essentially a booklet of slides filled with a ton of great information impacting retirees. Making it even better, it often highlights things that are regularly overlooked by just about anyone (including professionals) planning for retirement today. With that in mind, I’ve selected 10 charts that I think everyone transitioning into retirement should see with a little commentary on each. Every chart comes directly…

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Spending Your Life Savings – Two Ideas For Overcoming the Fear of Spending in Retirement

Spending Your Life Savings – Two Ideas For Overcoming the Fear of Spending in Retirement

Retirement should be one of the most fun times of your life. But, generally, that’s only possible if you’re comfortable spending your life savings. I find that there are two psychological barriers that tend to restrict spending in retirement that I think are largely overlooked by the retirement community. If you intend to get comfortable spending in retirement, it helps to be aware of these barriers and find strategies to deal with them directly. Self Worth = Net Worth By…

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Should You Take the Pension Or a Lump Sum?

Should You Take the Pension Or a Lump Sum?

For those that are lucky enough to have a pension, this is always a popular question. For those without a pension of any sort, this is one to skip. Given that I’ve gotten this question a few times over the past couple months, I wanted to provide some thoughts on this topic. When it comes time to retire, if you are offered a pension, you will likely be offered one of two scenarios: Scenario One: The option to choose: a…

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Should You Buy An Annuity For Retirement?

Should You Buy An Annuity For Retirement?

Annuities get a bad wrap. Most of that bad wrap is justifiably earned. Annuity providers often reward the “salesperson” (yes, many times, that is what they are) with a big commission check. As such, they are incentivized to encourage (scare you into) putting as much of your money as possible into annuities. As a result of those sales antics, many advisors that take the other side of the annuity argument spend a lot of time saying how horrible annuities are….

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One Bad Decision Is All It Takes

One Bad Decision Is All It Takes

There is a saying in professional golf that, “You can’t win a tournament on Thursday, but you sure can lose it.”  For the golf uninitiated, every professional golf tournament starts on Thursday and concludes on Sunday.  So, a good round on Thursday can put you in position to win with three rounds to go, but a terrible round on Thursday is likely to result in missing the cut and any chance at a paycheck. Retirement planning follows a very similar…

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New Page: Retirement Resources

New Page: Retirement Resources

The post this week is not a typical one.  I hope it is obvious based on my website name plus the content that I write that I am passionate about the subject of retirement planning.  I am also passionate about #RetirementLiteracy and improving the lives of retirees everywhere. There are many issues that I believe retirees should be educated about prior to turning in their retirement papers but often are not.  This is true regardless of net worth and regardless of…

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Why Saving In Your 60’s Is So Important – It’s Not the Reason You Think

Why Saving In Your 60’s Is So Important – It’s Not the Reason You Think

When I speak to folks that are in their final stretch leading up to retirement, one topic that often comes up is how much they should be saving.  While the simplest answer is “as much as possible”, I wanted to provide some additional perspective on why saving as much as possible in the homestretch to retirement is so important. It’s not the reason you think. Let’s say that you just turned 60 and you are thinking that you could squeeze…

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