Financial Planning

How to Test Run Your Retirement Plan (for Greater Success and Fulfillment Later in Life)

How to Test Run Your Retirement Plan (for Greater Success and Fulfillment Later in Life)

by | Nov 14, 2022 | Financial Advice, Financial Planning, Investment Management, Lifestyle

Sometimes long vacations can seem like a test run for retirement. Long walks on the beach. Endless rounds of golf. All the umbrella drinks you want. But there’s more to retirement than just all the cliches of tropical relaxation.

 

You are going to have plenty of regular days at home. But what will those look like? And how will you feel about being retired and on a “fixed” income? Are you confident in your current retirement plan to keep you not only financially comfortable but also enjoying life all the way to the end?

 

Here are three ways to test run your retirement plan for greater success and fulfillment later in life:

 

1. Start Thinking Like a Spender

No, we don’t mean to start spending frivolously.  We mean to start wrapping your mind around the idea that you will be moving from a saving mindset to a spending one. Because you will have chosen to invest wisely with the help of a trusted financial advisor, you will likely be receiving an income from your assets. But, for many folks, it can be a mental mind twister to no longer have a paycheck coming in (even if you owned your own business).

 

Some recent research from BlackRock and the Employee Benefit Research Institute showed that even after 17-18 years of retirement, retirees across all levels of wealth had 80% of their pre-retirement savings remaining. And that was even more likely for high-net worth individuals, who have assets worth more than $1 million.

 

You’re going to have to trust yourself and trust your retirement plan that you have enough to support the retirement lifestyle you want for the rest of your life. And enjoy it!

 

 2. Start Figuring Out Your Budget

  

A budget can really help you get into the right “spending versus saving” mindset. Now, a lot of folks think a budget means that you are limiting your spending, but a budget simply means telling your money where to go. And by figuring out a budget now, you will already have a game plan come retirement. No one wants to be the person who runs out of money, but you also don’t want to be the person who has millions just sitting in the background while you watch your life pass your by. It’s your money. You should leverage it to help you meet your goals, but also to make sure you live a fulfilling final chapter.

 

Once you have your budget all written out or put into a spreadsheet or app  — whatever works best for you (and your spouse) — take it for a test drive. See how it works for you for a month or so. You can make the necessary adjustments now so you’re ready once retirement comes along. You may uncover that you need more or less than you anticipated and can work with your financial advisor to make modifications as needed.

 

3. Start Planning a Routine

Aside from the money aspects, you also need to consider your time. It makes sense that all you can think of now is how great it’ll be not to have a plan. No meetings, no deadlines, no responsibilities. Woohoo! But, throwing routine completely out the window can be a huge change to you mentally and physically. Just think about the first few weeks of the pandemic when we were all asked to stay inside. It was certainly strange for many of us!

 

Often, mental health can be a touchy subject for some, but you do need to consider what a change in routine will do to yours. Remember that you will have had a schedule from the time you started school in kindergarten or preschool all the way through your working career. That’s a long time! And mental health can especially be a struggle for newbie retirees. Even before the COVID-19 pandemic caused depression and anxiety to skyrocket in adults of all ages, one in 10 (11%) older adults — those age 65 and older — reported depression or anxiety on the 2018 Medicare Current Beneficiary Survey. Consider printing out a calendar and writing up a model week of how you think you may spend your time, including when you will take care of non-negotiable responsibilities, your physical health, socialization, and household responsibilities to protect your mental health in this new stage of life. 

 

Still Need Some Help Preparing for Retirement?

 

Don’t have a retirement plan yet? Not confident in your current plan? Or simply need a retirement plan check-up? No matter where you are in your retirement planning journey, our team can help. Simply schedule an appointment with one of our trusted advisors to discuss your opportunities today.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

How to Take Advantage of the Inflation Reduction Act

How to Take Advantage of the Inflation Reduction Act

by | Oct 31, 2022 | Financial Advice, Financial Planning, Lifestyle, Tax Strategies

Have you considered switching to a more energy-efficient vehicle or perhaps adding solar panels to your home? How about a new water heater? With inflation on the rise, you may have been holding off on some of these larger purchases, but the government incentives passed with the Inflation Reduction Act may just cause you to reconsider.  

 

Following politics, especially in today’s divided times, isn’t everyone’s favorite pastime, so you may not be keenly aware of the opportunities made available by the passage of the Inflation Reduction Act.  Changes to Medicare and the Affordable Care Act seem to grab the most spotlight, but you would be remiss to ignore the other main components of the legislation: energy and climate. Starting in 2023, several tax credits will be available for Americans who switch to greener energy sources.

 

For a more in-depth look, here are three ways you can take advantage of the Inflation Reduction Act (IRA):

1. Electric Vehicles

Many Americans have started considering moving to an electric vehicle after gas prices hit record numbers. If you’re one of them, the time to buy may be now. The IRA adds incentive by offering tax credits up to $7,500 on a new electric vehicle and up to $4,000 on a used one placed into service after Dec. 31, 2022.

 

Even if you weren’t already thinking about getting an electric vehicle, you may want to change your mind. It seems the writing is on the wall for gas-powered cars, as California just banned the sale of new gas-powered cars by 2035 and even Ford is shifting to electric vehicle production. And you have time. The tax credit runs through December 2032.

2. Home Efficiency Updates

Homeowners looking to upgrade their home(s) may want to take advantage of the two tax credits and two rebate programs available for certain upgrades.

 

Installing energy-efficient insulation or exterior doors and windows are worth a 30% tax credit up to $1,200 per year. If you update or install heat pumps, heat pump water heaters, or biomass stoves and boilers, the cap increases to $2,000. There is also a 30% tax credit for installing solar panels or other renewable energy sources like wind, geothermal, and biomass fuel. To be eligible, projects have to be finished after Jan. 1, 2023 and before 2034, and, like all tax credits, the savings can only be realized once you file your income tax return.

 

In addition, the IRA established rebate programs that offer either up to $8,000 or up to $14,000 but you have to make 150% or less than your area’s median income, which is established by the U.S. Department of Housing and Urban Development. The HOMES Rebate Program covers upgrades that increase your home’s overall efficiency via upgrades, such as solar panels or new windows. The High-Efficiency Electric Home Rebate Act (HEEHRA) offers rebates for switching to electric appliances and doing other electric retrofitting like:

  • Electric stoves, cooktops, ranges, ovens, and clothes dryers
  • Electric wiring
  • Heat pump water heater
  • Heat pump for space heating and cooling
  • Insulation, air sealing, and ventilation

3. Prescription Drugs

Of course, the health care portions of the bill could help as well. For those old enough to be on Medicare, the IRA puts a $2,000 per year cap on out-of-pocket prescription drugs. This won’t take effect until 2025, so even those about to retire should keep their eyes open for ways to save, especially if you are diabetic. The IRA caps insulin costs at $35 a month.

Need Help?

We know that you’re used to us handling your investments and helping you with the most efficient tax strategies, but all major money decisions affect your financial plan—even if it’s just making some home or vehicle upgrades.  That’s why we want you to be aware of these incentives. They won’t last long, and we’d like you to take advantage if you wish. At Platt Wealth Management, we’re always here to help, even for life’s simpler decisions, like these.

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

Reinventing Yourself in Retirement

Reinventing Yourself in Retirement

by | Oct 27, 2022 | Financial Advice, Financial Planning, Investment Management

Typically, when you start thinking about or talking about retirement, the main topic of conversation is about money. But the whole idea of retirement is to get to enjoy the rest of your years however you want!

 

Before and during your working years, you likely had to make many sacrifices and answer to your parents, bosses, or anyone who wasn’t yourself. But now you get to become and/or celebrate the version of yourself you always wanted to be without any burdens or expectations.

 

So, even as your financial advisors, we are going to tell you to forget all of those questions about finances, RMDs, and Medicare. And instead, ask: How do you want to spend the rest of your life? And here are five tips for reinventing yourself in retirement to get you started:

 

 Determine Your Passions

 

What are you passionate about? These can be hobbies or causes or something as simple as only drinking really good wine. But don’t pigeonhole yourself. What you are passionate about does not have to be the same as what you’ve always done.

 

Try to remember that you are under no obligations in retirement. You don’t have to impress anyone. So, what do you really care about? Once you have made that list, you then know what to refer back to when it comes to the rest of the tips.

 

Consider Your Goals

 

You’re not working anymore, but that doesn’t mean you can’t set any goals. We’re not talking about some big strategy; just whatever you want to accomplish while taking your passions into consideration. This helps set a list of priorities and even an order to those priorities.

 

For example, if traveling is a passion, then setting a goal of visiting all of the destinations on your bucket list by a certain date would be a good idea. None of us know how long our health will last, so putting anything more physical toward the top of your priority list is a good strategy.

 

Whatever your goals, just make them your own and ignore any naysayers.

 

Find Your Place

 

Where do you see yourself spending your retirement? Where should you be in order to be able to pursue your passions and accomplish your goals? That location could be right where you are and in a house that is paid off and can fit your whole family at Christmas. But it also could be somewhere entirely new.

 

Don’t be afraid to change location in whatever way that makes sense to you. Maybe you are a lifelong suburbanite who has always longed for a beach house or city apartment. Maybe you wish to spend the rest of your life with a family who currently lives on the other side of the country. Or maybe you love your current house’s location but hate the kitchen. Your surroundings make a big difference in your day-to-day happiness. Find the right place for you to spend retirement.

 

Establish Your Boundaries

 

Life and retirement are too short to spend with people who don’t bring you joy. You are under no obligation to spend time with people you don’t like. No more people from work you tolerate just because they’re your co-worker. You don’t need to impress anyone. And just because you’ve been friends with people for years, doesn’t mean you have to spend your well-deserved time and money in retirement to see those people if you don’t like them.

 

But you also can set expectations for other people. If you expect your children to spend at least one holiday per year with you, then talk to them about it and how important it is to you. Setting boundaries can be hard, but more often than not, they help create a healthier mental and emotional environment for yourself and those you care about.

Push Your Agenda

 

You will likely have at least one living parent and at least one adult child when you retire. You’ve done a lot of caregiving in your lifetime. It can be easy to continue that role in retirement when you seemingly have more time but don’t forget to prioritize yourself and what you want.

 

And be sure to dream big. What would you change about the world around you? What would things be like if you were in charge? Because you are now! Don’t be afraid to push your agenda and reinvent yourself and your world. You’ve earned it!

 

Need Retirement Help?

 

Want to have the freedom to reinvent yourself in retirement? Our expert financial advisors can help establish a retirement plan to give you the peace of mind you need to spend the rest of your years however you’d like. Contact us today for a complimentary Discovery Call.

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

What is Step-Up Basis? And What Does It Mean to You?

What is Step-Up Basis? And What Does It Mean to You?

by | Oct 18, 2022 | Financial Advice, Financial Planning, Investment Management

Do you imagine leaving a significant amount of wealth to your heirs? What about receiving a large inheritance? If either of these circumstances is in your future, you’ll want to understand the step-up in basis and how it could affect what you’re leaving as your legacy or what you’ll receive as the inheritor.

 

 

How the Step-Up in Basis Works

 

The “step-up in basis” is a tax provision that makes it possible for families to pass on certain types of assets at current market values instead of their original cost basis. Why is this important? For tax purposes, allowing heirs to avoid potentially significant capital gains taxes.

 

You see, generally, when appreciated assets are sold, it triggers a capital gains tax. Let’s take a piece of family property as a prime example as this is something we see left to heirs with our clients quite frequently. 

 

If a family that has owned a piece of property for many years sells it, the gain in value since its purchase date is subject to capital gains taxes. However, under the step-up basis provision, if a parent bequeaths the property to their children, the property’s cost basis, or original purchase price, is reset to the property’s fair market value at the time of their death. If the heirs immediately sell the inherited property at the fair market value, they will owe zero capital gains taxes.  

 

Now let’s put some numbers to it. If the owners of a bequeathed property paid $250,000 for it 25 years ago, and its current fair market value is $500,000 at the time of their death, the heirs inherit the property at its stepped-up cost basis of $500,000. That’s $250,000 that the inheritors won’t owe capital gains on!

 

Keep in mind, though, while they aren’t responsible for the $250,000 of capital gains in the property at the time of their parent’s death, they are responsible for taxes on gains on the property going forward. If they sell the property later for $800,000, they will be required to pay taxes on the $300,000 capital gain. 

 

Assets transferred to family members before the owner’s death aren’t eligible for a step-up basis, putting recipients who sell the assets in the position of paying capital gains taxes based on the owner’s original cost basis. 

 

Why Step-Up in Basis is Important

 

For families looking to leave a legacy and for continuity of their wealth, the step-up basis is critical because it prevents heirs from selling off other assets to pay the higher capital gains tax—plus it means the heirs can inherit more due to a lessened tax liability.

 

The step-up in basis is especially vital for family businesses such as farms that lack the cash on hand to cover the tax. If they are hit with a significant tax bill, many would be forced to downsize the business or sell it completely. 

 

However, not all assets are treated the same when transferred upon the owner’s death. In planning to maximize your estate for your heirs, it is vital to understand how the IRS treats various types of assets. 

 

Assets Eligible for a Step-Up in Basis

 

Most assets are eligible for a step-up in basis if they are transferred to heirs upon the owner’s death, including:

 

  • Family residence
  • Investment properties, including apartment, commercial, retail, and medical buildings
  • Securities such as stocks, bonds, ETFs, and mutual funds
  • Businesses and equipment
  • Art, antiques, and other collectibles
  • Assets held in a living trust

 

Asset not Eligible for a Step-Up in Basis

 

Generally, tax-favored investment vehicles such as qualified retirement accounts and annuities are not eligible for a step-up primarily because the owners have already benefited from significant tax breaks during their lifetimes. That means beneficiaries are responsible for capital gains on contributions made to the plan. 

 

Non-eligible assets include:

 

  • Qualified retirement accounts, including IRAs, 401k, 457, and 403b plans
  • Defined benefit plans
  • Money market accounts
  • Certificates of deposit
  • Assets held in irrevocable trusts

 

The Bottom Line

 

The step-up basis is a legal tax loophole that allows heirs to receive assets upon the owner’s death at current market values, thus freeing them of capital gains taxes based on the original cost basis. It’s a significant estate planning tool families we help our clients use to maximize the value of their estate for their heirs. Of course, it is essential to work with a qualified estate or financial advisor to understand how the step-up in basis affects your estate plan and to ensure your assets receive the most favorable tax treatment.  

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

5 Tips to Stay Calm During a Market Downturn

5 Tips to Stay Calm During a Market Downturn

by | Oct 11, 2022 | Economic News, Financial Advice, Financial Planning, Investment Management, Uncategorized

Is the economy slowing down? How will rising interest rates impact my finances? Is a recession around the corner? Scroll through any newsfeed and you’ll hear these unsettling questions. And while the headlines can be alarming, we remind our clients of the benefits of staying calm, cool, and collected—keeping their eyes off the headlines and focused on the end goals we have set up for them. 

 

Stay Invested

 

Some of the costliest mistakes investors make come down to one thing and one thing only…their emotions! If you have a sound investment strategy, there’s no reason to “jump ship” in a downturn. This is called panic selling. Panic-selling is when you sell your assets when values are down to try and avoid further loss, with the intention of “jumping back in” when the market has recovered. The thing is, though, that we never know when or where the bottom is, nor do we know when it will recover.

 

Remember Big Dips Can Precede Large Surges

 

And, because the market has some of its best days right after some of its worst, most investors miss out on the recovery and end up re-buying similar assets at a higher price—plus the liability on tax events they may have triggered by liquidating their assets. Just consider those who sold at the bottom of the March 2020 COVID-induced drop and missed out on the miraculous, V-shaped recovery we saw over the next two years.  If fear prompts you to sell, you could miss the upside.

 

Take Your Eyes (and Ears) Off the Market

 

Where focus goes, energy flows. The more you buy into the headlines, the more emotionally affected you may be by them. But no matter how diligently we watch the headlines, none of us can control what will happen with the stock market. So, if you feel the noise in the media tempting you to make a financial move you might regret, just tune out the noise. And of course, connect with your financial advisor to discuss your concerns. This is often all that is needed to restore a sense of peace and confidence in the financial plan.

 

Focus on What You Can Control

 

There are some aspects of our financial lives that we can control with our actions, and others we cannot. As discussed earlier, we can’t predict market volatility – and we certainly can’t control it – but we can understand that its disruptions are temporary and won’t result in permanent loss. As long as your advisor is re-balancing and speaking with you about how they are handling your portfolio during the downturn, it’s unlikely there is much needed from you—except, of course, your trust in the process, the plan, and the long-term goals your advisor set up for you.

 

Lean on the Help of Your Financial Advisor

 

Your financial advisor is here to help you with more than just investment management, tax planning, and retirement planning. We are here to help you stay even-keeled and level-headed when major and minor events threaten your cool. Of course, we update, re-balance, and diversify your portfolio ongoing to make sure you stay on track to reach your goals, but if a market downturn has you worried, we’d be happy to go over your financial plans with you at any time.

 

Remember, the market moves up and down daily. Market downturns (and upswings) are par for the investing course. We’re here to help you make the most of each situation to maximize your returns long-term.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

How Market Cycles Can Impact Retirement

How Market Cycles Can Impact Retirement

by | Sep 13, 2022 | Economic News, Financial Advice, Financial Planning, Investment Management

Markets go up. Markets go down. But no one can predict when, how, why, or for how long. Ups and downs are par for the investing course, but market cycles can have a greater impact on those nearing or in retirement than those in their accumulation years. That’s because in retirement you simply have less time and fewer opportunities to rebuild your savings should the market take a turn for the worst.

 

So, in order to understand how market cycles can impact your retirement (and what you can do about it) let’s look at some facts.

 

 

Understanding the Impact of Market Cycles

 

The most noticeable impact market cycles can have on your retirement is in regard to income distribution. When you rely on your investments to generate income, a less-than-favorable market cycle can dictate how long your money will last. That’s why it’s imperative to determine the optimal spend down of your assets, which can be complex and based on many factors (both known and unknown).

 

Over the years, many financial advisors have been applying the “4 percent rule,” developed several decades ago by financial planner William Bengen. Bengen modeled various asset allocations and spend-down rates over a 30-year period to see how each would have fared. He found that, between 1926 and 1976, an asset allocation mix of 50 percent stocks and 50 percent bonds enabled retirees to safely draw down four percent of their assets annually without running out of money. 

 

Following that rule in the 1980s and 1990s made sense because bonds and stocks experienced primarily positive returns. It didn’t work quite as well in the 2000s with a largely stagnated stock market, forcing retirees to deplete their assets more quickly.

 

What complicates this rule of thumb is market volatility, which introduces a greater risk to the portfolio. When retirees are drawing down assets during a declining market period, there is a higher probability their assets will not last as long as they’d hoped. The only remedy then seems to be to reduce the spend down rate, live a diminished lifestyle, or risk depleting their assets too soon. And of course, no one wants to run out of money.

 

There is an even greater risk when the market declines at the beginning of retirement. A steep market decline in the first few years before or after retirement, even if followed by a sustained market increase, can severely impact future income. This risk is referred to as a “sequence of returns” or sequence risk and is one that very few DIY investors are privy to. And if they are aware of the risk, they tend not to know how to account for it in their financial plans.

 

The Greatest Risk Retirees Face: Sequence of Returns Risk

 

When it comes to retirement drawdown and market cycles, timing is everything. That’s because a sequence of returns risk stems from the timing of market returns and their impact on your portfolio when you begin to draw down your assets.

 

While it is fair to assume that the market will generate an average rate of return over time, that doesn’t account for the timing of those returns. Your portfolio can average eight percent a year over twenty years, but if the first three to five years consist of negative returns, it could be too much to overcome even if the next fifteen years produced positive returns. 

 

Why? Because loss and gain are not inversely proportional. If stocks in your portfolio decline in value, you need to sell more shares to meet your income needs. That reduces the number of shares left to grow inside your portfolio. During a prolonged market decline, that accelerated depletion of shares could make it difficult for your portfolio value to recover as the market recovers. 

 

Imagine your portfolio like an apple tree. Each year you need to take 40 apples from the tree to survive. Based on the tree’s history, this is a safe rate at which the tree will at least replenish if not surpass restoring those 40 apples. But, if when you begin taking those 40 apples out each year, the tree starts to produce fewer apples—you run the risk of using up all your apples before the tree has a chance to grow more.

 

The Risk (or Reward) is Greatest at the Beginning of Retirement

 

Conversely, drawing down your assets during an advancing market could provide the boost needed to carry your portfolio through future market declines or allow you to live an enhanced lifestyle. That also means if your portfolio experiences negative returns in later years, it will probably have a minimal negative impact. 

 

Consider the following chart showing two portfolios starting with $500,000. Both are drawing down assets at a rate of $25,000 per year adjusted for 3% inflation. Portfolio 1 experiences negative returns in the first three years, followed by multiple cycles of positive and negative years. Portfolio 2 starts out with four years of double-digit returns followed by a typical market pattern of positive and negative returns with three years of negative returns at the end. 

 

 

 

Portfolio 1

 

 

Portfolio 2

 

 

Age

Return

Withdrawal

Value

Return

Withdrawal

Value

65

 

 

$500,000

 

$500,000

 

66

(-23.1%)

$25,000

$365,250

22.7%

$25,000

$582,825

67

(-6.1%)

$25,750

$318,704

19.6%

$25,750

$666,456

68

(-0.3%)

$26,523

$291,397

18.0%

$26,523

$755,377

69

24.5%

$27,318

$328,694

24.5%

$27,318

$906,202

70

18.0%

$28,138

$354,777

(-0.3%)

$28,138

$875,706

71

19.6%

$28,982

$389,764

(-6.1%)

$28,982

$794,858

72

22.7%

$29,851

$441,613

(-23.1%)

$29,851

$588,250

80

(-23.1%)

$37,815

$181,631

22.7%

$37,815

$790,464

81

(-6.1%)

$38,949

$133,941

19.6%

$38,949

$899,073

82

(-0.3%)

$40,118

$93,572

18.0%

$40,118

$1,013,911

83

24.5%

$41,321

$65,035

24.5%

$41,321

$1,210,566

84

18.0%

$42,561

$26,529

(-0.3%)

$42,561

$1,164,868

85

19.6%

$26,529

$0

(-6.1%)

$43,838

$1,052,361

86

22.7%

$0

$0

(-23.1%)

$45,153

$774,491

94

(-23.1%)

$0

$0

22.7%

$57,198

$976,010

95

(-6.1%)

$0

$0

19.6%

$58,914

$1,097,167

96

(-0.3%)

$0

$0

18.0%

$60,682

$1,223,467

97

24.5%

$0

$0

24.5%

$62,502

$1,445,033

98

18.0%

$0

$0

24.5%

$64,377

$1,376,948

99

19.6%

$0

$0

(-0.3%)

$66,308

$1,230,356

100

22.7%

$0

$0

(-6.1%)

$68,298

$893,562

Avg

6.5%

$654,451

$0

(-23.1%)

$1,511,552

$893,562

 

 

For this analysis, the same rates of returns are used in both portfolios, except their sequence is reversed. So, both portfolios generated the same 6.5% average rate of return, yet the outcomes were vastly different due to the sequence of returns. 

 

Key Takeaway

 

While you can’t predict the stock market’s direction, much less the sequence of returns as you enter retirement, you can prepare a diversified portfolio that is designed to handle such possibilities. We help our clients mitigate this risk and provide them with peace of mind that the retirement income plan we have built for them will be able to mitigate the sequence of return risk and boost their overall lifetime income sufficiency.

 

Creating Your Financial Strategy

At Platt Wealth Management, we know that life is about so much more than accumulated wealth and that real, impactful financial planning starts with what you want most out of life. That’s why our mission is to provide the financial expertise our clients need to think through and achieve the dreams they never thought possible. If this sounds like the financial advisory relationship you’re looking for, we encourage you to reach out and schedule your complimentary appointment with our team today. Or you can call the office directly @ 619-255-9554. We look forward to meeting you.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Get Started

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

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