Whether you’ve been diligently planning for retirement or planning to work until the end of time, professional advice can help you arrive successfully at the destination.
Bill Cohen, of Oakbridge Partners, a well-known Atlanta firm with nearly fifty years in the wealth management industry, says, “In order to prepare for retirement and have a successful retirement experience, the key is to have a well-formulated plan and stick with that plan.
When working with clients, we begin by analyzing a client’s investment horizon, tolerance for investment risk, current and future needs from a portfolio and their ultimate goals and aspirations. These could range from spending your last dollar travelling the world, providing for your children and grandchildren, supporting charitable endeavors and/or any other priorities. Each plan should be customized to address that client’s unique needs and goals.”
Cohen says that, in today’s investment environment, with interest rates being so incredibly low, it is difficult to generate a risk-free return that keeps up with inflation. “Most retirees have to take a certain level of investment risk to achieve their goals,” he says. “It’s our job to help people discover that delicate balance between risk and reward so that they stick with their plan in different market cycles. It’s very important that they don’t overreact when the market sells off or are remorseful of missed opportunity when the market is roaring. Smart and steady wins the race when it comes to achieving retirement goals.”
It’s also important that retirees learn to focus on those things they can control, like periodically rebalancing their portfolio. By rebalancing, Cohen means “taking a little risk off the table when the market goes up by selling stocks and adding more stocks when the market sells off.” This requires discipline, he say, “and one of the hardest things for investors to do is to keep their emotions in check when the market gets rocky. Providing that discipline is one of the most important things that we do for clients.”
Cohen says a simple baseline rule of thumb is that you can spend 4% of your portfolio each year for about 30 years and not run out of money. “That rule is not bulletproof for everyone, but it is a reasonable baseline to work from,” he says.
“Stress-testing a client’s plan is a must as we know that investment returns are not guaranteed, and they do not happen in a straight line. We believe that it is key for clients to match what they value with how they spend and invest. You want to be prudent and responsible while also allowing your financial resources to help add joy to your life.
Securing a trusted team of advisors (attorney, CPA, financial advisor) who have a fiduciary responsibility to serve you will provide confidence to all your financial decisions. Retirement comes hard-earned for most of us, but it does not have to be difficult to get there.”
Tax attorney Lance Einstein, who is also co-managing partner of MendenFreiman, LLP, a boutique law firm that specializes in trusts and estates, tax controversy, business planning and estate administration, views estate planning as a collaborative effort.
He works closely with clients and other professional advisors to come up with a plan for retirement. Einstein’s role is to determine the client’s estate plan, which includes preparing wills and trusts, health care directives and powers of attorney.
“It’s a good idea to create an estate plan because it provides your wishes and decisions for how your assets will transfer upon your death and who will have decision-making authority when you pass away or are incapable of making your own decisions,” he says. “It’s important to remember that everybody’s estate and situation is unique and there is generally not a one-size-fits-all approach. This is important to your retirement planning because it takes the burden off your family and friends, minimizes any disputes amongst them and can save considerable time and money.”
Einstein begins the estate-planning process by sending the client a questionnaire in which they provide their personal and financial information. He will then use their answers to advise them on the recommended plan and to prepare the will, trust, heath care directive and/or power of attorney.
“We will review the information and have an initial meeting to discuss our recommendations and the client’s wishes,” Einstein says. “From there, we prepare the appropriate documents and then schedule meeting for the client to execute the documents. At the completion the meeting, we provide the original estate planning documents and recommend that they be kept in a secure location, in addition to an organized binder with copies of the documents that we recommend be kept in an accessible location.”
Sammy Grant knows all about client-centered approaches to financial planning. An attorney educated in trusts and estates — as well as a CPA, Certified Financial Planner practitioner, licensed real estate salesperson and Chartered Life Underwriter — he brings a wealth of experience to the clients he serves.
“When someone asks me what I do, I think of the term ‘behavioral finance,’” Grant says, “as it’s essential for me to understand the whole person and their purpose in life. More and more people are engaging concierge medical practitioners who offer full access to one person who understands your full picture. It’s the same way in our business; it’s important to have all of your assets, needs, goals and advice from other specialists working together.”
There’s often a big difference between expectation and reality. “In the middle of a stressful career, lying on the beach and playing golf sounds amazing,” Grant says.
“And often it is for a few months, however, you need to give thought to your purpose in retirement. All of a sudden, someone reaches their financial goals, but no one is asking for their help or advice and they are not being intellectually challenged. I suggest you take a 5-day work week and map out the week and look at what you’re doing. You’ll see how much of that time is related to work even if it’s getting dressed or driving in traffic to work.”
When a client’s purpose is in place, “that’s where the value of an advisor with experience can help clients make the best tactical decisions,” he says. “It begins with doing the math. I need x dollars to be able to retire. From that point, here are some examples of smaller details to think about: Which of your accounts makes sense to use first? It’s important to use your assets properly. Let’s say you have a general savings account, a company 401K and a Roth IRA. You need to maximize the tax efficiency of which accounts to draw on in which years when you retire.
For each person that is different, because of your income or age. Someone who is 63 does not have to worry about how reported income will impact Medicare premiums the same way someone age 68 will. Inquire how you can set yourself up to delay social security until you are 70. That’s advised in most cases because behind the scenes the amount you receive goes up approximately 8 percent per year by delaying until 70.
There’s a lot of sophisticated social security planning depending on each spouse’s earnings and more, making this one of the most important decisions for many retirees.
Have you updated your estate planning documents and reviewed your current needs? Rethink your estate planning as to where your needs and your family’s needs are at the time of retirement. Most working couples first have their wills drafted so that if something happens to them there are persons in place to raise their minor children. By retirement, those children are often grown and the documents might focus more on insuring your assets flow to the right people at the right time, taking into account possible creditors and spouses not in the picture many years ago.”
Since people are living longer, Grant says it’s important to contemplate what will happen if clients can no longer manage their own affairs. “Presumably a spouse would know if they are the ones you are relying on,” he says, “but if it’s not a spouse, does that person know your wishes, where your assets are and everything else they need to know to be your effective advocate?”
He says that semi-retirement can start out as a trial run to evaluate your options.
“As you start to pull money out of your accounts and your savings, or you distribute your income, it’s critical to understand how you really feel at the end of each day,” Grant advises. “If you’ve been a saver your entire life, will you be able to handle the change to withdrawing funds potentially in a declining stock market and not lose sleep? You’ve worked hard to earn the benefits coming from a happy retirement so be sure you spend as much time planning for your emotional and psychological bucket as you do your financial one.”