5 Steps to Keep Your Retirement Plan On Track

Published on: Feb 2, 2021
Man enjoying playing golf and thinking about retirement.
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A 2019 study shows that 56% of Americans over age 50 experience involuntary job loss—and many are forced to retire earlier than expected[1]https://www.propublica.org/article/older-workers-united-states-pushed-out-of-work-forced-retirement.


This study was conducted before the global pandemic and following recession, and we are still waiting to see the true after-effects of that on the Baby Boomer and Gen X. We can only assume those numbers will get worse. The reality is a large number of Americans could be retiring much sooner than they thought, while also feeling too broke to retire.  


Our hope is that you get to retire on your own terms, but let’s take a look at five crucial steps that you can take to keep your retirement plan on track—even if you wind up needing to retire sooner than planned.


1. Minimize Your Risk By Diversifying Your Portfolio.


Regardless of how volatile the market is, one thing that helps protect your investments is having a properly diversified portfolio. Diversification and asset class allocation are always critical to protecting your wealth.


Whether it’s COVID-19 or anything else, something will eventually come against your retirement investments—so you need to be ready. A proper portfolio diversification is the solution.


Here are four key benefits to diversifying your retirement plan:


  •   It reduces the consequences of a wrong forecast.
  •   It minimizes your risk of loss to your overall portfolio.
  •   It exposes you to more opportunities for a return.
  •   It puts in some safeguards against adverse market cycles.


Remember, diversification is simply spreading your risk across many different types of investments. Your goal should be to increase your odds of success for your retirement plan.


2. Update Your Portfolio.


If you aren’t updating your plan on a regular basis, you’re setting yourself up for a fall. Everything is in a state of change: Stocks, bonds, interest rates, and your own life events, just to name a few. One small event can throw your entire portfolio out of whack and leave you vulnerable.


Plus, your appetite for risk will change as you grow older and your portfolio should adapt to that. If you’re not having regular meetings with your financial advisor and consistently rebalancing your portfolio, you might want to find a new financial advisor.

3. Learn The Difference Between Tax Planning and Tax Preparation.


One thing you can’t afford to overlook as you approach retirement is taxes. Don’t wait until it’s too late to learn the difference between tax planning and tax preparation.


Tax planning is forward-thinking. With tax planning you’re looking two years, ten years or twenty years into the future. Your advisor and your accountant should be talking to you about the taxes you’re deferring now and what that means for how you’ll be taxed in retirement.


Tax preparation is looking backwards, like looking in the rear-view mirror. It’s when your accountant figures out what you owe for the year prior.


So, do you have a CPA that is not only looking back, but is looking forward? Both are vital to getting the most out of your money in retirement.


Retirement accounts like an IRA or 401k are very popular plans. People love them when they’re working, because they don’t have to pay any taxes on them. In fact, they actually get tax breaks on them. It feels like a win until they get to retirement and all of a sudden they realize they have to pay taxes on every dollar they pull out. That could be anywhere from 15-35%—it’s variable based on the state you live in.


This is why working with your team on a tax plan is so important.


4. Maximize Your Social Security Benefits.


Your income is the foundation of your entire retirement plan, and Social Security is the cornerstone of that foundation. It’s too critical to overlook. But a staggering 96% of hardworking Americans lose an average of $111,000 on Social Security benefits per household[2] … Continue reading.


Don’t be like the majority who leave all that money on the table. Social Security rules are always changing, so you want to rely on a professional to help you. This means getting in touch with your CPA or accountant and figuring out when the timing is optimal for you to start drawing on those benefits.


Now, very few people will be able to live off of their Social Security alone. So, how can you truly prevent being too broke to retire? That leads us to. . .

5. Create a Bulletproof Retirement Plan.


You want a retirement plan that’s reliable, sustainable and ready for anything that comes against it. Successful retirements are built on more than how much money you have. It’s so much more than asking, “How much money do I need to have saved up for retirement?”


Instead you want to be asking, “How much income will your money generate on a regular basis through the rest of my life?” Your professional advisor can sit down with you and give you that picture.


You should be meeting with your advisor regularly to not only build out your retirement plan, but tweaking it and improving it. Interest rates go up and down. The stock market is volatile. Dividends go up and down. Bonds do well, until they don’t. Every investment has ups and downs, peaks and valleys, good years and bad.


If you keep all your eggs in one basket, you can lose suddenly because you were banking on this one thing. What’s in vogue today may not be in five years. Times change, so you need to be ready. You and your advisor need to be taking your Social Security, pension, dividend stocks, bonds, real estate, annuities—everything—into consideration for the whole picture.


We’ve said it before and we’ll say it again: The good news is there’s never a time without good options. When you work with an advisor you’ll uncover the best options you have right now.


We hope these five simple steps give you confidence in your ability to generate reliable income throughout your retirement. The biggest immediate takeaway is this: Be sure to look into a Roth, an IRA, a Roth 401k, and possibly making some conversions there. Now is a good time because taxes are low. In fact, they may never be this low again, so at least talk with your advisor about your possibilities.


We know retirement can be complex, and we hope this helps break down some of that complexity. Peace of mind in retirement requires a plan. Schedule an appointment with us today to get started.


At Beacon Capital Management, we believe having peace of mind in retirement, requires considering all of your options, and creating a plan. If you like this article, check out the Beacon Retirement Strategies Podcast, where we talk to some of the sharpest and most professional financial advisors in Nashville. We understand that retirement planning can feel complicated and overwhelming, so we take a few moments to break down some of the more complex parts of retirement so you can have a better understanding of how they apply to you.

What to hear more about this topic? Listen to our Podcast Episode 13: 5 Steps to Keep Your Retirement Plan On Track



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1 https://www.propublica.org/article/older-workers-united-states-pushed-out-of-work-forced-retirement
2 https://www.cbsnews.com/news/study-says-retirees-lose-more-than-100k-by-claiming-social-security-at-the-wrong-time/#:~:text=Almost%20all%20Americans%20take%20Social%20Security%20at%20the%20wrong%20time%2C%20study%20says&text=Only%204%25%20of%20retirees%20claim,or%20about%20%24111%2C000%20per%20household.

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