Don't delay retirement

Don’t Delay Retirement: Put A Plan In Motion

People are retiring later and later in life, and missing out on the sixties…the best decade of your life! There are many reasons that cause people to delay retirement, but most are unnecessary and can be avoided with a strategic financial plan. Keep reading to find out more about utilizing your financial plan to prepare you for a happy, comfortable, on-time (or even early) retirement.

In order to avoid delaying your retirement, it’s vital to set yourself up for long-term wealth enjoyment. Just because you make a good income during your career and save money for retirement  (in the traditional sense) does not mean you will retire on time. In fact, many of our clients (particularly dentists) are doing both of these things and still retiring later—closer to age 70. If you are doing everything “right” according to the traditional method of retirement planning, why are you having to delay retirement to stay afloat?

 

Factors that delay retirement 

First, professionals pursuing higher education delay entering the workforce, naturally cutting down on the number of years they will have over the course of their career to accumulate wealth. Once you are finally in the workforce, it is likely that you have several large financial obligations such as student loans, purchasing a home, or starting a family. 

Additionally, many people do not understand the exponential curve of life and its impact on long-term wealth building, which can also slow down wealth creation and push out retirement. There are three phases of the curve (accumulation, distribution, and conservation), which are dynamically connected and intertwined. It is important to look beyond wealth accumulation and understand that your money decisions throughout life will affect multiple, if not all, of these phases. 

 

The role of your Financial Treatment Plan

In order to overcome these factors that delay retirement, you must have a dynamic Financial Treatment Plan in place. This plan should be set up long before you are ready to retire, and it is incredibly important to look at this plan holistically and at a macro-level. Nothing works in a vacuum, and your financial decisions in each area of your plan affect the others, including your retirement. A Financial Treatment Plan will help you make the right decisions with every dollar that comes into your life by positioning it to benefit your long-term wealth.

You deserve to be able to retire on time without stressing over your finances. Learn more about our philosophy and the importance of a Financial Treatment Plan in our book, Your Retirement Smile. You can also learn more about our services on our website, and give us a call to schedule a consultation to discuss your financial future!

Man donating money on phone

Charitable Giving: The Ultimate Triple Win

When planning for your financial future, there are a few things that are top-of-mind: a retirement fund, money to leave behind for your family, and saving, conserving, and protecting your wealth. Charitable giving can help with all of those factors. While it may sound counter-intuitive, giving more can mean that you have more money in retirement and more to give to your family when you are gone.

We speak with many people who are hesitant to make sizeable charitable donations because they view it as a transaction, or a wealth deduction. Thinking of charitable giving in this way is a microeconomic perspective and can put you at a financial disadvantage. We challenge you to evaluate your financial situation and plan on a macro-level, where all facets of the plan are connected and you keep your wealth in motion. This approach means that your charitable giving can actually increase your wealth and be a strong part of your strategy.

With a holistic and well-balanced financial treatment plan, charitable giving can act as a “triple win” in the following ways: 

  1. Have more income in retirement.
  2. Not disinherit your spouse or children.
  3. Make a gift to the charity of your choice and see the results of your gift during your lifetime.

When a well-positioned charitable strategy is paired with a traditional retirement plan, the tax benefits are three-fold. There is the potential to receive a tax deduction up front, a tax deferral on growth inside the plan, and tax-free access to investments at the end. Charitable giving, when carried out properly along with other diversified assets can be one of the most powerful distribution strategies.

There are a few different approaches to take, such as the TurboTithe strategy or a charitable remainder annuity trust (more on this in our book, Your Retirement Smile). Many people don’t take advantage of these opportunities in their financial plan because they are unaware of the benefits, or they did not find out about them early enough in their career. The right financial advisor who is concerned with your passions and best interest can help you work through the ideal method for your overall financial plan.

The bottom line is this: the better you are positioned financially, the more options and income streams you will have in the future. This gives you the freedom to make proactive decisions, and allocate your money how you want to—whether that means giving to charity or using it in other ways.

Let us talk to you more about charitable giving as a win-win-win strategy. Visit our website and give us a call to get on the right track with your financial future.

Pension vs 401k

Pension vs 401k: What You Need to Know

When thinking about retirement, there may seem like there are a lot of different paths to take. The best way to make good financial decisions for yourself and your future is to be well-versed and educated in personal finance topics, such as retirement plans. In this blog post, we are breaking down pensions vs 401k plans, two common retirement plan options, to help you better understand them.

Pensions

A pension is a retirement fund that an employer contributes to while you are working. In retirement, the funds from this provide you with guaranteed income, typically on a monthly basis.

There are several factors that determine how much income you receive in retirement, including: your age, how long you have been with the company, and your income while working. Additionally, different companies may have rules about pension eligibility.

Pensions are being phased-out across the country and it is becoming increasingly hard to find companies that still offer them. However, if you like the idea of a guaranteed income in retirement, which most people do, an annuity can be an alternative and acts as a “self-made pension.”

401k Plans

A 401k plan is a retirement fund that is offered by your employer and is funded by you. You are responsible for making all of the investment decisions, therefore you take on all of the risk associated with it. Even if your company matches your contribution, the burden of figuring out how much to contribute to save enough for your retirement falls entirely on you.

Additionally, 401k plans are controlled by the government and they make all the rules. The government dictates when you can take money out of a 401k and how it will be taxed. They can also change these rules, meaning that you may not be able to take out your money at the age you expected, or you may be taxed differently than you had planned.

What you should know

The best route to take when planning for retirement is extremely dependent on your situation, preferences, and retirement goals. We are big proponents of keeping your wealth in motion, as well as devising a retirement plan that doesn’t require you to take a pay cut in retirement. It is always best to talk through these decisions with a financial advisor so that you can set yourself up to be smiling through your retirement! In need of retirement planning or wealth management advice? Visit our website to learn about our services and give us a call to schedule an appointment.

Retired couple camping on beach

Don’t Let Poor Planning Take A Bite Out Of Your Retirement Adventures

Dentists and orthodontists juggle work, family and community responsibilities, with little time for a game of golf or planning for the future. When we ask dentists: “How do you expect to spend your money in retirement,” most answer “We are just going to live off the interest of what we’ve saved.”

The fact of the matter is nobody can live off the asset’s interest, whether it’s a CD or a savings account (typically generating 1-4%).  Example: If you have $1,000,000 and you are earning 2% on that investment, that’s generating $20,000 interest. Face it: That $20,000 won’t cover your living expenses…let alone a Tahiti trip.

Retirement Strategy: Solo Vs. Professional Help

According to U.S. News & World Report, running out of money is a retiree’s greatest fear. Retirement income replacement planning is key for savvy dentists and orthodontists who want to alleviate this fear. That’s why you need a good financial advisor who understands the dental and medical business.

At our firm, we work with dentists, orthodontists, and really any health professional to grow their income and diversify their financial products to include a mix of life insurance, disability insurance, structured equity and bond investments, annuities, business overhead insurance, retirement and long-term care plans.

Whether you’re near retirement or just starting your practice, now is the time to seek professional financial input and create your road to a happy retirement and ultimate financial success.

Invest Without Stress – Get Professional Help

Let’s say Dr. Jones is 60 years old, married and saved a nice nest egg.  Those funds have a lot of pressure on them. They have to provide income for BOTH he and his wife during their retirement l, which could extend 35 years.  And, if they want to leave some money to their kids, grandkids or a charity, it’s all coming out of their savings and earned interest.

If Dr. Jones is going at it solo or doing it himself, and the stock market fluctuates and interest rate changes as they always do, he has no control over how his investment will react. Add to that life or health changes requiring long-term care for he or his wife or runaway inflation, and you’ve got a heap of worry.

If Dr Jones has a 401 K plan and investments in place from years ago with the help of a financial advisor, he needs to re-evaluate that financial plan/investments and update it to reflect the current markets.

Many of our dentists look to retire or be in a position to retire at 60 or 62. Since that is relatively young, their savings have to last over a long period of time. Today’s standard recommendation for retirees is a 3-4% withdrawal rate off their entire nest egg, but with a 35 year projected life span, Dr. Jones and his wife could still run out of money.  If Dr. Jones has a million dollars saved, three years into retirement he may only have half that savings due to spending and market changes. Ask retired people that have lived through significant market downturns, like in 2008, it happens!

So ask yourself; Why should you take a 50% pay cut in retirement because you didn’t seek strategic, economically-sound financial advice from a firm such as ours?

What’s The Answer?

The first step is to evaluate where the dentist is today on the road to retirement and provide a personalized, strategic plan. Most dentists we initially see have only two or three sources of income (Social Security, a retirement plan and their dental practice).

We show them what they can expect if they continue with their current plan (or lack of one) and help them position their assets in a balanced way to provide them with significantly more income during retirement with the ultimate objective of full income replacement. Our basic approach?

  • Review all of the current financial products and their rates of return.
  • Create more efficient ways to manage their assets (retirement plans, investment accounts, savings, real estate and mortgages).
  • Compare different financial scenarios and market outlooks and customize their plan.
  • Create an exit strategy that doubles income in retirement at 7-8% distribution rates, not 3-4%.
  • Diversify all assets in a more strategic way by creating multiple streams of income that will include permanent life insurance, investments, real estate, and revise the retirement plans.
  • Factor in Social Security, interest or dividends on investments, spending down assets, rental income, charitable trusts, cryptocurrencies, collectibles and other ways to maximize income sources in retirement.

 

CPA and financial advisor, Tim Streid and orthodontist, Dr. Mart McClellan, are presidents of Macro Wealth Management, which is a firm that caters to the dental and medical professional. Utilizing a economically-based financial model to create short and long-term strategies for the future, they are the only dental-focused firm in America that uses this system and has a dentist on the team as an advisor.  Both are Registered Investment Advisors (RIA) and registered in multiple states in the areas of securities and life/disability insurance. They are authors of the new Forbes book “Your Retirement Smile: The Treatment Plan for Pay Cut Prevention in Your Golden Years.

For a free consultation with Macro Wealth Management, contact us at

800-281-0703

info@macro-wealth.com

yourretirementsmile.com