Retirement Rules Have Changed

A good friend of mine likes to say” If what you thought to be true turned out not to be true, when would you want to know?” In a nutshell, this is the current environment in Retirement. There are a lot of good people doing what they think is right, but it is contrary to what their objective truly is. Think about it this way. When you started to save for retirement was the objective to have the largest portfolio or to provide income for the rest of your life? Based on recent statistics the stress from relying on portfolios for income is not optimal. It is the largest cause of people losing sleep in retirement. This goes back to the statement of what if what you thought to be true was not. It is not your fault either. For most of your working life, you were conditioned to save in a pretax retirement plan. For 30-40 years you benefited from markets going up and down and if you waited it always came back. Now sometimes it took a little longer than others, but it is a true statement that it always came back. The problem is not the market, but your need for income in retirement that is the problem. The money you pull out to live on will never come back. This accelerates the depletion of your retirement funds. The solution for this is to create an income stream that does not go backward, and this is one area that has changed. Annuities. That’s right annuities were created to do exactly that. To provide income. The latest ones also provide some inflation protection and long-term care benefits. A properly structured income plan can provide the needed income, potentially tax-free, avoid market risk, and provide for long-term care benefits. Something that a portfolio simply cannot do.

The second rule that has changed and few people discuss is taxes. When you saved all the money in your pretax accounts it was with the understanding that you would pay the taxes when you withdrew the money. For most this worked out great for them as they saved in high tax earning years to take it out now in the lowest tax years. But like all good things, this too will end. The fact that we have over 30 trillion in debt and the Trump tax laws sunset in 2026 present a risk of legislative risk. Most increased taxes are a given too as when one spouse dies the surviving spouse must file as single instead of married and single tax brackets are less favorable than married.

Since most do not have the benefit of pensions anymore it is critical to see that the rules have changed and without a plan, you may have less money to live on the rest of your life. I provide a free no obligation initial consultation where we can look at how these rule changes affect you and how to address each of them. To schedule your appointment please call my assistant Morgan Wylie at (828) 559-0299 or send her an email at [email protected]. Let me help you use the rules to your advantage.