Retirement Planning: Maximizing your Success and Fulfilment

7 Goals of Retirement Planning

There are some critical retirement planning questions that everyone needs to ask their financial advisor. Although most people are fearful of knowing the answers. Proper financial planning should reduce unknowns and lead to financial serenity. Financial advisors produce retirement planning documents with the purpose of answering these sometimes-scary questions. Chief among these questions are:

The 7 Critical Question Approaching Retirement Age

• Do I have enough money to retire?
• When will I be able to retire?
• How will another stock market downturn affect my retirement?
• What is the risk that rising inflation could wipe out my retirement?
• What is the likelihood that rising tax rates affect my retirement?
• Could a medical condition and long-term care affect my retirement?
• What if my spouse passes or becomes disabled?

We at Serenity Wealth Management believe that having the answers to these questions is key to achieving financial serenity. Answering these important questions is the goal and major reason for our existence. We strive to obtain these answers for all our clients and prospects.

In addition to answering the above important financial question, we believe we should point out some pitfalls of some retirement plans. We do not intend to criticize anybody but instead we wish to point out some red flags we have seen with many plans.

The 5 Red Flags in Some Retirement Plans

• Red Flag #1, Suspicious Content of Some Retirement Plans
• Red Flag #2, Overly Complex Retirement Planning
• Red Flag #3, Overly Safe Investment Strategies with Little Growth
• Red Flag #4, Overly Simple Investment Strategies
• Red Flag #5, Over Concentration on Income-for-Life Planning

Suspicious Content of Some Retirement Plans

Most “white hat” financial advisors will prepare retirement plans provide true answers to the important questions above. However, other retirement plans are poorly concealed sales advertising to convince you to purchase a product. Don’t feel obligated by these retirement plans. Investment choices should be a separate conversation from retirement planning.

Some high price retirement plans may include over 150 pages of propaganda. They somehow believe that the weight of the plan (number of pages) may justify the cost. Their goal is to dazzle you with complexity. These long plans are difficult to read and harder to understand.

At Serenity Wealth Management we believe that most financial plans should be short and easy to understand. We believe retirement plans should state facts and not promote solutions.

Overly Complex Retirement Planning

Financial advisors often use Monte Carlo simulation to stress test your plan against market volatility. We believe market stress simulations are useful but are insufficient to provide financial serenity. Instead, tests using higher retirement tax rate assumptions, and much higher inflation assumptions may be more revealing. Most retirement plans do not adequately plan for these risks. We believe higher tax rates and higher inflation is extremely likely and should be considered in a full stress test.

Financial advisors often use risk scoring software to scare you about what the next economic down turn will do to your retirement assets. Yes, there are substantial stock market risk to consider, but do you need a made-up risk score to recognizes this? Here at Serenity Wealth Management, we prefer to prepare you and protect you from stock markets declines instead of scaring you about their inevitability.

We have seen overly complex retirement plans totaling over 200 hard bound pages. Is the complexity needed or is if just an excuse to charge a large planning fee? What is actually needed is clarity and not complexity.

Overly Safe Investment Strategies with Little Growth

Overly focus on safety is not the solution. Seeking this safety some investors invest in fixed income accounts, certificate-of-deposits, money markets, or fixed annuities. These accounts do not have the growth potential to become a significate retirement asset. Highly likely future inflation rates can dramatically dilute the value of these accounts. Fear of loss is important but should not be the only consideration in your investment and retirement planning. Having all your money in bank savings account, money market accounts, and bonds will not provide the growth you need to build your savings. You need a financial advisor professional to address and satisfy your investment fears in a way that also accommodates growth.

Overly Simple Investment Strategies

The desire for simplicity and automation is another emotion driving investment and retirement decisions. This is a leading reason why many 401k/403b participants choose target-date-funds. People often desire a Set-it-and-Forget-it automatic process. But isn’t the potential of 30 years in retirement worthy of more thought?

These target-date-funds blend bond mutual funds with stock mutual funds depending on your expected retirement date. These funds automatically adjust your percentage of bonds versus stock as you age toward that target date. Proper retirement planning is not so simple. Many human relationship, or HR corporate departments tend to feature these target date funds. However, your HR people have no credentials to make any investment recommendations. Done at all!

You need to seek a professional financial advisor for your retirement planning. Set-it-and-Forget-it is no plan at all! Review your plan at least annually with an independent professional financial advisor and not just your HR department or your 401k plan advisor. A 401k plan advisor only knows the often pathetic and limited options within your 401k. There are other options and considerations beyond your simple 401k plan.

Over Concentration on Income-for-Life Planning

People are accustomed to living off a paycheck and naturally seek out continuous and predictable retirement income. So much so that retirement planning products that offer guaranteed income-for-life are frequently purchased. But over concentration income-for-life solution can leave you exposed to other retirement risks. Among these risks are high inflation eroding the income’s value and emergencies requiring liquidity.

Since inflation has been tame for most of the last 30 years, many have forgotten how ravishing inflation can be. Inflation is returning! Inflation was as high as 9 percent in 2022 which is an indication of what is coming. We believe high inflation will become the norm in the near future because growing national debt will force high inflation’s return. Inflation will dilute the value of income-for-life products. Most income-for-life products do not have inflation provisions. Therefore, income solutions should be blended with growth solutions to provide protection against inflation.

Most income-for-life products have small and diminishing options for withdrawing emergency funds. And withdrawing any amount significantly reduces future income streams. Don’t forget or under estimate your need for emergency liquidity and cash.

Financial Serenity is our Goal

Our goal is to help you fully understand your current path toward retirement. We present our results in a simple format. What would happen if you do nothing? We’ll discover the “blind spots” and will prioritize which ones should be addressed first. After we agree on a strategy, we’ll discuss the tools and financial instruments that will potentially optimize your retirement plan.

It is likely that you will spend 20 to 30 years or more in retirement. Are you an expert at converting your retirement savings into retirement income? Have you studied and understand what your retirement taxes will be? Do you understand how inflation will affect you. Do you understand how a major illness could affect your finances? Your need for retirement planning is hopefully obvious. We are here to help you with planning in a very non-judgmental way. It is shocking how few people have a retirement plan but need one. Let’s make sure you have a plan.

Go to our booking page Calendley.com link to schedule a call with a financial advisor and retirement expert, Curtis Hill or Irina Hill. Discover how a clear retirement plan can add serenity to your life. Learn how “Not the same old advice” can benefit you.

Curtis Hill, CFP and Irina Hill, CPA provide financial advice, investment advice, retirement planning, and insurance in the Long Beach; Lakewood; Carson; Bixby Hills; Signal Hill; and the greater Los Angeles, California area.

Retirement Planning Issues and Finding a Financial Advisor

• Retirement planning involves critical questions that everyone should ask their financial advisor to achieve financial serenity.
• Key concerns include retirement readiness, market downturn effects, inflation risks, and potential medical issues.
• Beware of pitfalls: overly complex plans, suspicious content, overly safety-first strategies, simplicity in decision-making, and income-for-life focus.
• Real retirement planning requires a thoughtful approach, blending growth and income strategies while considering higher future inflation and higher future tax rates.
• Serenity Wealth Management aims to address these challenges and provides personalized retirement planning to ensure clients understand their path to retirement.