Many people have unanswered questions about setting themselves up for a successful retirement. Below are the primary risks to consider and some general ideas for overcoming them. We help our clients address these risks through financial planning, which starts with identifying the amounts needed to fund goals (like retirement). This conversation is different for everyone, so we invite you to connect.
Underfunding:
Not saving enough for retirement becomes harder to correct in later years. Try to maximize saving through your employer’s retirement plan. Many Americans contribute only the amount that triggers an employer match, failing to adequately fund this primary channel for retirement savings. Since salary-deferral contributions are not taxed, the reduction to your take-home pay is less than any contribution increase.
Overspending:
Be conservative with your portfolio’s growth rate assumption, and try to set your baseline withdrawals below that rate. Overspending early in retirement can be particularly detrimental to the longevity of your portfolio. Consider a flexible withdrawal approach where you can give yourself a “raise” In years when the market performs better than you projected.
Longevity:
Life expectancies are a mid-point, not an end-point. What you don’t want to do is plan to live to age 88 and turn 87 without enough money for the next 10 years. With increasing life expectancy, retirees should plan to spend 35 years in retirement.
Investments too Conservative:
The refrain of maintaining your principal and living off interest is not a good strategy. Inflation compounds every year, so every retiree needs some growth investments to maintain their lifestyle. Growth investments do better over long periods of time and can offset the challenges of increased longevity and rising costs.
Inflation and Medical Costs:
Inflation occasionally spikes (like after COVID), but even a 4% rate doubles your expenses in 18 years. It’s estimated that 80% of your lifetime medical expenses occur in your last five years, and the medical cost inflation rate averages 8%. Be sure to factor rising healthcare and living costs into your retirement planning.
The “4% Rule” is outdated and can compromise a peaceful retirement if markets decline early in your retirement. Integras Partners created time-layered strategies to grow investments with appropriate risk throughout your retirement.
Employer-sponsored retirement plans, like 401(k)s, are designed to encourage saving during your career but are not efficient when it comes time to take money out.
How Withdrawals Are Funded
Many 401(k)s don’t enable choice when investments are sold. Some plans sell pro-rata (every investment is sold based on its percentage of your account). Others use a hierarchy-based approach where investments are sold in a predetermined order, often cash and low-risk assets first, which would leave your remaining investments skewed toward riskier assets. Both methods would mean you’re taking unnecessary risks and leaving investments not aligned to your needs.
Mandatory Tax Withholding
401(k) distributions are typically subject to mandatory 20% federal income tax withholding, regardless of whether this is the right amount for you or how you would like to pay. Effectively, it requires taking an extra 25% of taxable income to realize the same amount of cash.
Required Minimum Distributions (RMDs) and Account Aggregation Rules
Once you reach age 73 (or 75, depending on your birth year), the IRS requires you to take a minimum amount from retirement accounts each year. With 401(k)s, you must calculate and withdraw the RMD from each one separately.
Consider rolling 401(k)s into an IRA for several advantages:
Broader investment choices – 401(k)s typically have a limited menu of investment options which may or may not suit your needs in retirement.
More flexible withdrawal strategies – including the ability to choose exactly which assets to sell and when.
Customizable tax withholding
Ability to aggregate RMDs – If you have multiple IRAs, you can choose to take your combined RMDs from a single account, reducing the likelihood of missing one and incurring a penalty.
If you’re approaching retirement, now is the time to review your options and develop a withdrawal strategy that aligns with your goals, not just your plan’s default settings.
Call us today to learn how we can help. 404-941-2800
Navigating the complexities of financial planning requires trust, transparency, and a commitment to your best interests. At Integras Partners, we proudly embrace our role as fiduciary advisors, ensuring that every recommendation and strategy is aligned with your unique goals and values.
The Fiduciary Difference
Being a fiduciary means we are legally and ethically obligated to always act in your best interest. Unlike some financial advisors who may earn commissions on products they sell, Integras Partners operates on a fee-only basis. This structure limits conflicts of interest, allowing us to provide unbiased advice tailored solely to your financial well-being.
Building Long-Term Relationships
We believe that effective financial planning is rooted in understanding you—your aspirations, values, and life circumstances. By fostering long-term relationships, we can adapt your financial strategies to life’s changes, whether it’s a career transition, family milestone, or market fluctuation.
Transparent Communication
Transparency is key to building trust. We take the time to explain our investment strategies and the rationale behind any changes. Our clients receive regular updates, including quarterly performance reports and market commentary, ensuring you’re always informed about your financial journey.
Holistic Financial Planning
Our approach goes beyond investments. We offer comprehensive financial planning services that encompass tax efficiency, retirement planning, estate considerations, and legacy goals. By addressing all aspects of your financial life, we aim to provide a cohesive strategy that supports your long-term objectives.
Peace of Mind Through Market Cycles
Market volatility is inevitable, but with Integras Partners, you can have confidence in your financial plan. Our investment strategies are designed to withstand market fluctuations, focusing on long-term growth and stability. This resilience allows you to focus on living your life, knowing your financial future is in capable hands.
Choosing a fiduciary advisor like Integras Partners means placing your trust in a team dedicated to your financial success. Our commitment to unbiased advice, personalized planning, and transparent communication ensures that your financial journey is guided with integrity and expertise.
Talk to us and get some personal guidance.
Call us today to learn how we can help. 404-941-2800
2025 is a tumultuous year for financial markets, which understandably is rattling even the most experienced investors. While we can’t control investment returns or government policy, focusing on things that you can control may alleviate some of the anxiety.
1. Don’t panic, and remember, this too shall pass. There are scores of historical examples where surges in negative sentiment preceded above-average market returns. In the eight times when sentiment fell by 10% or more in a month, forward returns were higher is seven of them. Average returns 6 months later were +12%, and 12 months later +22%. No one knows that today’s declines will result in a similar experience, but markets usually find a way to rally over walls of worry.
2. Ensure savings accounts are working for you. As you are able, keep some extra cash on hand. Most big bank accounts have pitiful interest rates. Consider a high-yield money market, paying 3.50% or more, and link it to you checking account for ease of moving between accounts when needed.
3. Are your investments actively managed? This is not the best time to be a passive investor, or hold mostly index funds. Continued tariffs will create winners and losers. Market research will be very important to identify vulnerability and opportunity.
As we age, living situations and health needs will change. Parents and their children avoid planning for them, for very understandable reasons:
Parents don’t “want to be a bother”. Kids “don’t want to pry” into their parents’ lives. Money conversations can be tense. Parents don’t want to choose one child over another to take important roles in making health and financial decisions.
Our Generational ConversationsTM program helps adult children and their elder parents navigate planning for Housing, Care Management, Financial Continuity, Legal Strategies, and Security.
We want to help. As families get together over the holidays, it’s a great time to broach these subjects. Click here to download our free Themes for Family Conversations. We wish you all the joys of the holidays and everyone in your family a little extra peace.
Call us today to learn how we can help. 404-941-2800
Working with Integras Partners brings confidence to your financial journey. We help clients not worry so much about money, knowing that an expert is minding your investments.
Many individual investors let emotions and procrastination impact their decisions – hesitating to buy when prices fall and feeling eager to invest when markets are strong. A disciplined advisor provides steady, informed guidance to improve your financial outcomes.
