The Basics: Essential Tips to Enhance Your Retirement Plan

Whether you're planning to retire in a few months or 35 years from now, implementing these strategies can significantly improve your retirement plan:

1. Build an Emergency Fund We’ve all heard the advice to save six months’ worth of living expenses to cover essentials like car payments, mortgage or rent, food, utilities, insurance, and diapers. For some professions, this recommendation has extended to 12 months to provide added security and peace of mind.

2. Maximize Your Tax-Deferred Accounts Your tax-deferred accounts include 401(k)s, 403(b)s, SEPs, Traditional IRAs, and Annuities. The goal is to structure these accounts so that future income is below your standard deduction and does not trigger Social Security taxation.

3. Implement 'The Shift' Carefully calculate how much to shift from taxable and tax-deferred accounts to your tax-free bucket (like Roth IRAs) over time. Be mindful that this shift will result in extra taxes, so proceed cautiously to avoid moving into a higher tax bracket. Shift slowly enough to avoid financial strain but quickly enough to finish before tax rates rise.

4. Consider a Life Insurance Replacement Plan (L.I.R.P.) If you qualify, the sooner you secure a L.I.R.P., the better. Here’s why:

• Lower Costs: Life insurance is cheaper when you're younger.
• Health Considerations: There’s no guarantee your health will remain unchanged, so getting approved early is wise.
• Power of Time: Time allows your policy’s cash accumulation component to grow, providing financial security later.
• Dual Benefits: The death benefit can also serve as Long Term Care (LTC) coverage, allowing you to use it for LTC expenses if needed. Studies show that 75% of couples over 65 will need LTC, and by 2050, over 1 million Americans will be over 100 years old.
• Down-Market Protection: Use the cash accumulation account to cover discretionary expenses in years when the market is down. Indexed Universal Life Insurance policies provide a no market risk component.
• LTC Coverage: Ensure your death benefit is substantial enough to provide impactful LTC protection. The costs associated with Long Term Care, Assisted Care and Nursing Home Care is on the rise. Visit this website to see exactly what these costs look like in your area of the country. https://www.genworth.com/aging-and-you/finances/cost-of-care
• Peace of Mind: Even if you don’t use it, your loved ones will receive a tax-free death benefit. Honestly, we believe this is the type of luxury you pay for yet hope to never use.

5. Calculate Your After-Tax Income Shortfall Determine your after-tax income needs in retirement and subtract any guaranteed income sources like Social Security or pensions. This will reveal any shortfall.

6. Contribute to a Guaranteed Lifetime Annuity Consider directing part of your retirement savings into a Fixed Indexed Annuity (FIA) with a Piecemeal Roth Conversion (PIRC) feature. This allows you to convert your annuity to a Roth IRA over time, managing the tax impact down the road. Ensure the conversion results in enough tax-free income to cover any retirement shortfall.

Not if, but when you're ready to discuss your retirement strategy, our team is here to help. With hundreds of years of combined experience, we’re committed to crafting a plan that fits your unique situation. We often work with clients who feel overlooked by the financial community, and we’re here to show you what’s possible and help you understand the reasons behind it.

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