retirement planning

Many Americans plan to work beyond retirement age, and this is a cornerstone of their financial plan. Unfortunately, this isn’t a reliable strategy. A study from the Employee Benefit Research Institute revealed that 46% of retirees in 2023 retired sooner than expected. While the average expected retirement age in 2022 was 66, the actual average was 62, according to a 2022 Gallup poll. Reasons, including health issues and job loss, contribute to earlier retirement and most are beyond the retiree’s control. This highlights the need for careful retirement planning that does not rely on a later retirement for success. These simple strategies will help savers craft an air-tight retirement plan. [1]


Play The Long Game

Retirement can last a long time. Planning for 30 days is one thing, but 30 years is another. As difficult as it is to predict all expenses for life after retirement, zeroing in on the main costs will get the budget ball rolling. Entertainment, hobbies, and travel costs should factor into the budget with necessities like healthcare, housing, utilities, food, transportation, and clothing. Once savers identify their potential costs, they should consider their income sources and know that inflation and taxes will also play a role. A healthy debt-to-income ratio is ok in the short term, but savers should eliminate debt by retirement. A retirement plan should also consider setbacks and pitfalls and compensate for them. Finally, while no one enjoys thinking about long-term disability or death, estate planning is a critical part of the retirement planning process. The goal is to build savings that can sustain a retiree for the remainder of their years, and savers can best achieve that objective with the help of a financial advisor.


Identify Retirement Income Sources

A successful retirement plan starts with early saving and identifying what monthly and annual costs might look like. Equally important is knowing how to cover those expenses. In 2022, The Federal Reserve Board reported that 79% of retirees had one or more private income sources, with Social Security being the most common. While Social Security is an important income source in retirement, it only replaces about 40% of the average retiree’s annual pre-retirement earnings. Additional income sources are necessary to live comfortably and without assistance in retirement. Those may include pensions, personal savings, contribution plans such as 401(k), 403(b), individualized retirement accounts (IRAs), annuities, interest, dividends, rental income, and more. A financial advisor can help earners maximize and protect their retirement savings by managing risk, diversifying investments, and ensuring regular distributions from multiple income streams. [2]


Mitigate Taxes

Taxes are among the chief expenses Americans will incur during their lifetime. Keeping taxes low on investments before and especially after retirement will help preserve the nest egg.  Tax-deferred accounts such as 401(k)s, 403(b)s, and traditional IRAs reduce taxable income until retirement when withdrawals and regular income distributions (RMDs) are taxed at regular income rates. Roth IRAs only allow after-tax contributions, and RMDs do not apply (unless inherited). Therefore, withdrawals are not taxed in retirement when the income bracket is lower. Converting a traditional IRA to a Roth IRA is one way to avoid paying the tax on withdrawals later in retirement. Here are some other ways participants can reduce taxes.

  • Take advantage of employer match dollars by saving as much as possible.
  • Make catch-up retirement account contributions when eligibility starts at age 50.
  • Maximize tax benefits according to tax bracket with a combination of tax-deferred and Roth accounts.
  • Contribute to a Health Savings Account (HSA): Investments grow tax-free with non-taxable withdrawals on qualified medical expenses. Non-medical withdrawals after 65 are taxed as regular income.
  • Invest in tax-free or tax-deferred assets such as municipal bonds and annuities.

Create An Estate Plan

After many years of saving and accumulating assets, the only thing to do with those that remain in death is to give them away. Estate planning allows the efficient passage of assets to charities and beneficiaries. It is the best way to carry out the intentions of the estate holder in the event of incapacity or death. Estate holders should take the following steps:

  • Name a power of attorney, the person or agent with the legal right to exercise control on the estate holder’s behalf.
  • Name the beneficiaries and contingent beneficiaries for pensions and insurance who will receive the assets from employee-sponsored 401(k), IRAs, and other insurance products. Note there may be tax implications.
  • Establish trusts for taxable investment accounts, real estate, and personal property. These are good for large or complicated estates and provide more control of asset distribution.
  • Create a living will that conveys in writing the medical course to take in the event of the estate holder’s permanent incapacitation or unconsciousness.

Consult A Retirement Financial Advisor

The value of an experienced financial advisor in retirement planning is immeasurable. An advisor builds a strategic framework that considers age, goals, income, tax brackets, and expenses to guide participants through the most overwhelming facets of the process. Through regular portfolio reviews, financial advisors provide analysis of financial standing relative to their client’s goals and make necessary changes to maximize their savings and minimize their tax burden. 

There are no do-overs in retirement. SHP Financial prepares clients with investment and income strategies and a solid retirement plan. Contact us today for a complimentary financial consultation.





The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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