Retirement Planning: More Than a Number

May 20, 2024

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Calvin D. Wiersma

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Calvin D. Wiersma

MST, CFP®

Financial Advisor

calvin@grandwealth.com
P:
616-451-4228

Many clients have some preconceived ideas about how to save for retirement—even savvy investors who have been saving their entire career. One of the most common myths is that you should be saving up to reach a particular dollar amount.

People arrive at their retirement number in a number of different ways, like reaching a balance at which you could live off 4% per year, or 10 times your salary, or even a nice round number like $5 million or $10 million. Take a moment right now and think about the savings goal you have. How did you determine that goal? How long ago? How sure are you that this number will help you get what you want out of your retirement?

Don’t oversimplify decisions that will affect the rest of your life! Here’s the thing about any handy number or method you could find in a book or a blog post: retirement is not just a number, retirement is what you hope to accomplish. That’s why it’s so important to work with a skilled financial planner.

At Grand Wealth, we create a precise, detailed, and personalized financial plan that prioritizes your goals for retirement, and all the possible scenarios you might face. Here are some key questions we ask to help each client:

1. What do you hope to accomplish in your retirement?

Perhaps you want to be able to have enough retirement income to travel, support charitable causes, purchase a vacation home, or provide for your family during retirement. Or maybe you want to use this chapter of your life to focus on passing along what you care about, and instilling the next generation with the values and beliefs that are important to you. Don’t wait around to decide!

The best time to figure out how to structure your retirement plan is right now. A skilled financial planner can help you think through your goals, project how much income you’ll need to meet them, and set you on the right path to success. Even though markets, tax laws, and investments may change when we look at a future decades from now, one thing that will stay the same is that you are the only person who can set goals for yourself and work to achieve them.

2. What kinds of assets will provide your retirement income?

Perhaps you have a mix of assets in your portfolio, such as businesses, real estate, stocks, bonds, or savings. Perhaps you anticipate continuing to receive income, or having additional expenses. Not all assets are created equal—retirement plans are as unique as the people who make them.

Just think about how assets are taxed. For example, your $5 million in an IRA or 401(k) will be taxed like regular income, but that same $5 million in a Roth IRA is tax-free money for the rest of your life! In fact, across all your investments, it matters where you’re saving and where you’re pulling money from. A knowledgeable financial planner can help you navigate the tax rates applied to your retirement assets to make the most of what you’ve worked so hard for.

3. How will you keep your retirement plan running smoothly?

Perhaps you’ve already started doing research on how to plan out your life in retirement. There is no shortage of books and websites giving advice! But if you only remember one thing from this article, let it be that there is no one-size-fits-all solution to retirement planning. Rules of thumb and the writings of wealthy people can only get you so far in this process, where there is no such thing as “set it and forget it.” In fact, we find that the best approach for many clients can change a lot from year to year.

In order to make wise withdrawals, avoid siphoning off your savings to pay taxes, and live your life the way you want to, you will need to keep a close eye on your plan. Even supposing that you reach your magic number of so many times your salary or so many million dollars, taxes and regulations are notorious for changing. That’s why having an expert in your corner makes all the difference—one who understands both your goals and your assets.

Plan for your life—not a number

When you’re considering how much you should save or where you should invest, remember that you’re making decisions about your real life. Take steps to plan a real retirement so that you can live it! Whether you’re only dreaming about your next chapter or you’re already writing it, the best way to get the most out of your retirement is to work with a knowledgeable professional.

Take time to talk with your loved ones about these big questions. What do you hope to accomplish in your retirement? How do you want to be remembered? And, just as importantly, find an expert financial planner to help you make your dreams a reality. Ensure that your future is secure so that you can enjoy the wealth you have created and have the life you want.

Disclosure:
The information in this article is based on data gathered from what Grand Wealth Management believes are reliable sources. It should not be construed as advice meeting the particular investment needs of any investor. Grand Wealth Management is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Grand Wealth Management's investment advisory services can be found in its Form ADV Part 2, located on our website.