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Building Your Best Life

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Updated May 18, 2021

Jason Munz CTFA, Vice President, Eau Claire

Four steps for developing a plan to achieve your retirement goals

A long, fruitful retirement is the ultimate goal that we work toward for the majority of our lives. Any financial advisor will tell you that the sooner you start planning for retirement, the better. But life often gets in the way and before you know it, that goal that seemed so distant for so long is nearly upon you—at least it should be. The reality is that fewer than four in 10 non-retirees feel they are on track for retirement, according to the Federal Reserve’s Report on the Well-Being of U.S. Households in 2019. And nearly half of individuals who are already retired were forced into it, either because of health problems, caring for family, or other factors. That’s not the rosy picture many of us envision, but there are steps you can take to ensure you’re prepared to achieve your retirement goals and overcome unexpected obstacles along the way. Trust Point’s Jason Munz, CTFA, Vice President, lays out four strategies to guide your planning.

Step 1. Define Your Goals

“Retirement is a huge goal. That huge pin at the end of the map,” Munz says. “But many people don’t actually know what retirement is.” It’s very important to look at the things you plan to do, the lifestyle you plan to live and what that is going to cost, he says. Once you have that established you can develop a plan to manage all of the different variables. Trust Point’s approach is to help clients develop retirement plans that are goal based. Once specific goals are identified, the team helps clients determine what needs to be done to accomplish them. Prioritization is also key to good planning. A golf club membership, for example, might not be as important as plans to head south each winter. “Once you approach it from a goals-based standpoint, then I think it’s much easier for people to conceptualize what their retirement looks like and envision why they’re planning the way that they are,” Munz says. He notes that it’s also important for married couples to discuss their goals with each other, so they can work for their mutual benefit.

Step 2. Be Flexible, and Don’t Forget About Taxes

“Once your goals are set, this is the first and most important thing I would tell clients,” Munz says. “The more flexible you can be with your plan, the more successful it is going to be.” That’s not just from a cash flow or spending standpoint, he says, but also from a tax standpoint. It is advantageous to have multiple buckets of taxable or tax-free accounts to be able to draw from, as taxes are the biggest expense that people fail to think about in retirement. “The majority of people have accumulated their wealth in some tax-deferred product, whether it be a 401(k) or an IRA or a Roth IRA,” he says. Just as Trust Point urges clients to be diverse in investments, Munz said it’s important to think about diversification within tax segments. Drawing from a variety of accounts allows you to maintain a steady cash flow and tax rate through retirement.

Step 3. Manage Debt

Munz advises clients not to head into retirement with debt, as it can become challenging to pay off with fixed sources of income. There are exceptions to that rule based on individual factors, but it should be discussed with your advisor. One exception is a mortgage. “If they have a mortgage, then that requires a little more in-depth conversation in terms of what they have to pay off and what sources they have to pay it off,” Munz says. Also monitor your spending and avoid incurring new debt. There are a variety of online tools, such as Mint and YNAB, that can help you monitor and categorize your spending to get a better handle on what your budget really is.

Step 4. Set Up an Emergency Fund

“The one thing I can guarantee you is that whatever you’ve got in mind for a plan right now, it’s going to change,” Munz says. “And the best thing you can do from a risk mitigation standpoint is to have an emergency fund.”

The fund could be set up in a variety of ways, such a simple savings account or money market account. Its purpose would be to provide you with 12 to 24 months of living expenses, depending on your risk tolerance of liquidity.

So, if faced with an emergency situation, you would have cash to rely on without having to sell investments. “Or if the markets were to go haywire and we were to get into another recession, you would have cash that you could pull from in addition to any interest or dividends that you’re earning on your investments without having to sell shares of anything,” Munz says. “With 12 months you can weather just about any storm.”

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Jason Munz CTFA, Vice President, Eau Claire