The Retirement Readiness Pop Quiz

1. What age do you plan to retire?

It sounds simple, but most people underestimate this. The average retirement age in the U.S. is 62, often not by choice.

2. How long will you live?

Consider current life expectancy: about 84 for men and 87 for women. A 65-year-old couple has a 50% chance one of them lives to 92.

3. How much annual income will you need?

Base it on lifestyle goals, not a vague percentage of pre-retirement income.

4. How much have you saved for retirement so far?

Roughly 46% of U.S. households have $0 saved. Where do you stand?

5. How much do you plan to spend annually in retirement?

Create a detailed budget, including discretionary and fixed expenses.

6. What are your sources of retirement income?

Include Social Security, pensions, rental income, annuities, and investment withdrawals.

7. When will you claim Social Security?

Claiming early at 62 reduces benefits permanently. Delaying increases them significantly.

8. What is your Social Security breakeven age?

This is the age when total lifetime benefits from claiming later surpass those from claiming early.

9. Are you coordinating benefits with your spouse?

Delaying the higher earner’s benefit can increase survivor income.

10. What is your retirement savings goal?

Fidelity suggests 10x your income by age 67. Is your number realistic?

11. What is your withdrawal strategy?

The 4% rule is a starting point. Will you withdraw the same amount each year, or adjust with the market?

12. What is your portfolio allocation?

Stocks vs. bonds? Domestic vs. international? Are you considering risk tolerance and time horizon?

13. Are you accounting for inflation?

With 3% inflation, $1 today will be worth $0.81 in 20 years.

14. Have you considered healthcare costs?

Fidelity estimates a 65-year-old couple may need $300,000 for out-of-pocket medical expenses.

15. Are you planning for long-term care?

Consider whether you want insurance or will self-insure. Long-term care can derail a retirement budget.

16. Have you created a tax plan?

Taxes can be your biggest expense in retirement. Are you strategically withdrawing from pre-tax and Roth accounts?

17. Are you prepared for required minimum distributions (RMDs)?

RMDs start at age 73 or 75, depending on your birth year, and apply to pre-tax accounts.

18. Do you have a written retirement plan?

Only 33% of workers do. A written plan increases confidence and retirement success.

Key Takeaways from Joe and Big Al

• Start early and save consistently $750/month from age 30 or $1,530/month from age 40 can grow to $1 million by retirement.
• Use Roth conversions while tax brackets remain low until 2026.
• Don’t underestimate healthcare or inflation plan ahead.
• Your investment vehicle matters less than your asset allocation.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Retirement Pop Quiz: 18 Questions to Get You Ready to Retire appeared first on ROI TV.

The Importance of Portfolio Fit

Many individuals neglect to evaluate whether their portfolios align with their financial goals:

• Regular Checkups: Only 42% of people regularly review or rebalance their portfolios, leaving them vulnerable to misalignment.
• Diversification: Reassessing and rebalancing portfolios ensures they remain diversified and tailored to your age and objectives.

Average Account Balances and Savings Rates

Understanding average savings rates and benchmarks can help you assess your progress:

• Account Balances: Average balances vary significantly by age, with $100,000 for those in their 40s and $160,000 for those in their 50s.
• Savings Rate: The average rate is 8.9%, but aiming for 15-20% of income is ideal, especially if you’re catching up.

Asset Allocation by Age

Asset allocation is key to ensuring your portfolio is age-appropriate:

• Younger Investors: Those in their 20s should have around 90% in stocks for growth.
• Older Investors: As you age, shift towards more bonds and cash to reduce risk.
• Common Mistakes: Data shows that people in their 60s and 70s often have portfolios resembling those in their 30s, indicating a mismatch.

Cash and Bond Allocations

Cash and bonds play specific roles in a well-balanced portfolio:

• Cash: Should primarily be for emergencies or short-term needs, not long-term investments. However, many portfolios have around 28% in cash across all age groups.
• Bonds: Only about 10% of portfolios for those in their 50s and 60s are in fixed income, despite its ability to provide stability and income.

The Importance of Global Diversification

Most portfolios are heavily weighted in U.S. stocks, creating unnecessary risks:

• Home Bias: Around 80-85% of portfolios are in U.S. stocks, with only 15-20% in international markets.
• Balanced Approach: Consider allocating two-thirds to domestic stocks and one-third to international stocks to reduce risk and tap into global growth opportunities.

Retirement Savings Benchmarks

Benchmarks help track whether you’re on target for retirement:

• By Age 30: Aim to have one times your income saved.
• By Age 40: Increase to three times your income.
• By Age 60: Strive for eight times your income.
• Tax Diversification: Use a mix of tax-deferred, tax-free, and taxable accounts to enhance flexibility.

Dollar Cost Averaging for Long-Term Growth

Investing consistently over time mitigates market timing risks:

• How It Works: Dollar cost averaging involves investing a fixed amount at regular intervals, averaging out market highs and lows.
• Benefits: This strategy reduces the emotional aspect of investing and builds discipline.

Avoiding Common Portfolio Mistakes

Portfolio management requires avoiding these key errors:

• Overweight Cash: Too much cash limits growth potential.
• Underweight Bonds: Skimping on bonds can increase volatility and reduce income stability.
• Market Timing: Trying to time the market often leads to missed opportunities and lower returns.

Conclusion

Ensuring your retirement portfolio aligns with your goals requires regular review, proper asset allocation, and strategic diversification. By addressing common blind spots and implementing these strategies, you can create a portfolio that grows with you and secures your future. Start optimizing your retirement portfolio today to achieve long-term success.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Ensure Your Retirement Portfolio Matches Your Goals: Key Strategies for Success appeared first on ROI TV.