Lisa and Mike’s Starting Point

Lisa, 60, and Mike, 58, came to Joe and Alan with concerns about their retirement readiness. They had worked hard to save $400,000 in a 401(k) and $60,000 in a brokerage account. Their combined income was $106,000, and their annual expenses amounted to $70,000. Like many others, they hoped Social Security benefits of $50,000 annually would bridge the gap. With plans to retire at 67, Lisa and Mike wanted to know if they were on the right track.

Running the Numbers with EASI

Joe and Alan introduced them to the EASI Retirement System. By entering details like income, current savings, home value, and expected expenses, the tool calculated their financial trajectory. The results were sobering—the software projected that their savings would be depleted by 2043 if no changes were made. This wake-up call highlighted the need for adjustments to secure their financial future.

Adjusting the Plan: Strategies for Success

The EASI tool didn’t just highlight the problem; it also guided Lisa and Mike toward actionable solutions:

1. Boosting Savings: Increasing their savings rate from 6% to 20% of their income significantly improved their financial outlook. While challenging, this adjustment ensured more robust retirement savings.
2. Extending Work Years: By delaying retirement by a few years, Lisa and Mike could increase their Social Security benefits and add to their savings. These extra working years made a significant difference in their financial projections.
3. Tax Diversification: Joe and Alan recommended shifting some savings into Roth IRAs to reduce future tax burdens. This strategy provided more flexibility and less taxable income in retirement.
4. Optimizing Investments: Adjusting their portfolio to balance growth with preservation of capital ensured their nest egg would last longer.

Addressing Potential Challenges

Retirement planning isn’t just about numbers; it’s about preparing for the unexpected:

• Healthcare Costs: Joe and Alan reminded Lisa and Mike to account for medical expenses, which a Fidelity study estimates at $315,000 for a couple from age 65 onward.
• Market Fluctuations: Maintaining a diversified portfolio helped them weather market ups and downs without derailing their plans.
• RMDs: Required minimum distributions (RMDs) at age 73 or 75 were factored into their plan to avoid tax surprises.

Why the EASI Retirement System Works

The EASI Retirement System provided Lisa and Mike with a clear, actionable roadmap. The tool’s strength lies in its ability to:

• Assess financial readiness with easy-to-understand metrics.
• Highlight gaps in savings and income.
• Offer tailored strategies to meet individual goals.

Conclusion

Lisa and Mike’s story demonstrates how the EASI Retirement System can transform uncertainty into confidence. By increasing savings, adjusting timelines, and diversifying investments, they turned a potential shortfall into a sustainable plan. Ready to take control of your retirement? Start your journey with the EASI Retirement System today and build the future you deserve.

YMYW

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 EASI Retirement System: Lisa and Mike’s Path to Financial Security appeared first on ROI TV.

1. Retirement Readiness: Defining Goals and Building a Plan

One of the most important first steps in retirement planning is defining your retirement goals. Whether you envision a quiet life or want to travel the world, creating a plan that supports those goals is essential. Start by asking yourself:

• When do I want to retire?
• How much income will I need?
• What will my living expenses look like?

Once you’ve answered these questions, it’s time to consider how you’ll build up your savings and take into account income taxes in retirement. Tax-deferred accounts (like traditional IRAs), taxable accounts, and tax-free accounts (like Roth IRAs) all play different roles in retirement planning. By understanding how each works, you can create a diversified portfolio that balances your tax burden and maximizes your retirement income.

For those just starting out, following a retirement readiness guide or seeking help from a financial advisor can be a crucial step toward building a well-rounded plan.

2. Smart Savings Strategies to Prioritize Retirement

Saving for retirement doesn’t happen overnight, but there are actionable strategies that can help boost your retirement savings, regardless of your current financial position.

• Pay yourself first: Set aside a portion of your income for retirement savings before anything else.
• Maximize your employer match: Take advantage of any retirement account contributions your employer offers. This is essentially “free money” that boosts your overall savings.
• Save bonuses and raises: Commit to saving a portion of any bonuses or salary increases. Over time, this will significantly increase your retirement nest egg.
• Contribute to Roth and traditional IRAs: For 2024, the contribution limit for IRAs (traditional and Roth combined) is $7,000 (or $8,000 if you’re age 50 or older). Maxing out your contributions can significantly accelerate your savings.

These strategies will help you build the foundation of a strong retirement portfolio that grows steadily over time.

3. Tax Planning: Maximize Your Retirement Income

Taxes are often overlooked when planning for retirement, but they can significantly impact your total retirement income. One key consideration is your tax bracket in retirement—how much you’ll pay in taxes depends on which accounts you withdraw from and how much income you receive each year.

Roth IRA conversions are a popular strategy to help lower your tax burden. By converting traditional IRA funds to a Roth IRA, you can benefit from tax-free withdrawals in retirement. This strategy works particularly well if you expect your tax rate to be higher in the future.

Diversifying your accounts—tax-deferred, taxable, and tax-free—will help ensure tax efficiency throughout your retirement years. While it’s important to pay your fair share of taxes, you don’t want to overpay. Speak with a tax professional to evaluate your tax strategies and make sure your retirement savings are optimized for tax efficiency.

4. Understanding Social Security Benefits and Claiming Strategies

Social Security can provide an essential income stream during retirement, but many people don’t fully understand how to maximize their benefits. One of the key considerations is deciding when to claim Social Security. While you can begin claiming as early as age 62, waiting until full retirement age (usually 66 or 67) will increase your monthly benefit. Delaying until age 70 offers even greater benefits.

Additionally, it’s important to understand the tax implications of your Social Security benefits. Depending on your total income, a portion of your benefits could be taxable. By planning ahead and combining Social Security with other income sources like pensions or IRAs, you can reduce your tax liability.

If you’re married, consider spousal and survivor benefits as part of your retirement strategy. This can help ensure that both you and your spouse are covered financially, especially if one partner earns significantly more than the other.

5. Roth IRA Conversions: A Tax-Free Income Strategy

If you’re looking for a tax-efficient way to prepare for retirement, consider a Roth IRA conversion. This process allows you to transfer funds from a traditional IRA to a Roth IRA, converting taxable income into tax-free income in retirement.

However, timing is key when considering a Roth IRA conversion. If you expect your tax rate to be higher in retirement than it is now, converting funds to a Roth IRA could save you money in the long run. You’ll pay taxes on the amount you convert at your current tax rate, but after the conversion, your withdrawals in retirement will be tax-free.

It’s important to carefully evaluate both your current tax bracket and expected future tax bracket before deciding if a Roth conversion is the right move for you. Consulting with a financial professional can help you weigh the benefits and potential downsides of this strategy.

Conclusion: Steps to Take for a Secure Retirement

Being retirement-ready takes more than just saving money—it requires careful planning, tax efficiency, and maximizing income sources like Social Security. Here’s a summary of the next steps you can take to prepare:

• Develop a plan to save $10,000 a year to meet your retirement goals.
• Research and determine the best Social Security claiming strategy for your situation.
• Create a diversified portfolio that aims for a 6-7% return, balancing risk and growth.
• Establish a contingency plan for unexpected expenses or life events that could impact your savings.
• Optimize your tax strategy to reduce your tax burden and maximize savings, potentially through Roth IRA conversions.

By implementing these strategies and staying committed to your savings plan, you can enjoy a financially secure retirement and achieve your long-term goals.

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 Readiness: Strategies to Boost Savings, Maximize Social Security, and Minimize Taxes appeared first on ROI TV.