• Michael Wellings

Retirees and Pre-Retirees: Do You Have a Plan?


Last week, we went into brief detail highlighting those who could use the services of a financial advisory firm. The operative word there was brief. This time, we’d like to expand a bit on the needs of retirees and pre-retirees, specifically, and how we, or a firm like ours, could greatly benefit them.

Arguably, the top concern of retirees is fairly predictable. Put simply, they’re worried about running out of money in retirement. Indeed, for the average American, this is a fairly sobering thought; a report from CNBC stated that the average American family has only $95,776 saved for retirement. If that’s the case for you, please start saving more, and quickly. If you’ve planned adequately for retirement, though, and have a good nest egg, the question becomes “how can I make this last?” Truth be told, there’s a variety of methods and approaches.

At the lower end of the spectrum, you can go to your local Fidelity offices, tell them your total amount of assets, and they’ll tell you an amount that you can withdraw per month. In past articles, we’ve revealed our distaste for approaches such as these, but with the amount of people Fidelity serves, one could argue that’s the only choice available for them. On the other end of the spectrum, you have approaches and plans that are tailored to your needs, dreams, and goals. Advisors in smaller outfits oftentimes grill you with a huge range of questions, learn some pretty intimate information about you, and then develop typically a generic plan based on your desires. Our own process, Income in Stages, Money to Last®, is a comprehensive plan which takes into account just about all aspects of your life.

Another need of retirees and pre-retirees, though less common now, is estate planning. If you’re married, do you know what exactly will happen to your assets when you or your spouse passes away? Do you know how much you’ll get taxed based on those assets? As a point of reference, the estate deduction for 2016 was $5.49 million. After that amount, the tax rate is almost 40%. If you’ve got a ranch or other real estate investments, this could prove to be a significant hurdle for you; after all, nobody wants their assets to be taxed at almost 40%! The estate plan or succession plan you come up with needs to be cohesive with your financial goals, which is why you might want to seek the services of a financial professional who can then refer you to a good board certified estate planning attorney to get the legal side settled.

Now, once you’ve got your succession plan taken care of, what other concern could you have? You’ve got a solid plan that will hopefully fund you for the rest of your life, and you’ve got an estate plan hammered out which clearly defines your wishes upon your death. To that end, we have but one question,

“Can you trust your beneficiaries to manage money competently?”

We hope the answer is yes, but too often we see clients who are reluctant to leave a legacy for their families simply because their children or spouse are not good with finances. We have to say, it’s a very legitimate concern. How would you feel if the wealth that you had acquired after a lifetime of hard work was squandered? If you’re facing this dilemma, it is incredibly important for you to consider bringing your beneficiaries in the financial loop. Take them to your next account review with your financial advisor. Let them know your expectations for the wealth you are leaving behind.

Again, we do want to say that this is by no means an exhaustive list of financial needs for retirees and pre-retirees. These are, in our opinion, merely some of the most prevalent. If you’re facing one of the scenarios explained above, give us a call. All it takes is 15 minutes to get to know you and set up a meeting, and you’ll be well on your way to making your financial life easy.

Founded in 1985, there isn't anything Strategic Advisory Services, LLC hasn't faced. We hope to earn the right to do business with you.

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Houston, TX 77042

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