By Dennis Kagel, Chartered Financial Consultant
After visiting with literally thousands of clients over my 38 year career in the business, I’ve come to realize that when people seek retirement planning they’re typically presented with “old school” concepts and tactics. Tax deferred savings (stuff the maximum into your 401k and Traditional IRA, etc.), use the buy and hold investment strategy, asset allocation, and a so-called “safe” withdrawal rate. Get these things all set up and retirement’s more secure, right? I say this is probably a recipe for disaster with the market volatility and low interest rates of today.
This approach seemed to work well in the 1990s, but not so much today. Remember those “good old days” when the market just seemed to go up and up daily? As a beginning premise would you at least agree with me that we live in a different world today? Obviously, technology is the biggest single reason for our world being so different today. Not so many years ago it took some time for news of what was happening around the world to filter over to America and effect the markets. But today with the Internet, all the 24 hour a day news channels, etc. events anywhere in the world instantaneously impact our markets. I contend that we are actually living today in more of a “headline driven” and rumor world that results in the market reacting more often and more violently. This phenomenon of the market going up 200 points one day and down 300 the next is a relatively new thing we have to deal with.
Because we live in a different world today, we have a different market to deal with and consequently this calls for a new asset model.
According to author and financial advisor Doug Warren, if the financial meltdown of 2008–09 proved anything, it was that clients aren’t protected by traditional planning. And, even when traditional planning does increase retirement income, it attracts huge problems in the process — higher taxation. The result? After taxes, the high-gross-income retiree is left with a spendable portion that can’t support his or her retirement dreams. If they withdraw more they increase taxes and run the risk of depleting their savings. The solution? A combination of maximizing Social Security benefits, utilizing strategies that provide a guaranteed lifetime income, arranging assets that are exposed directly to risk so they are responsive (they react to changing market and economic conditions and indicators almost instantaneously), and rearranging accounts that are “forever taxed” to accounts that are “never taxed.”
Are you certain that your retirement accounts are arranged to accomplish the above? Do you realize the importance of your decision as to when to take Social Security and do you realize that there are strategies available that could possibly result in thousands of additional dollars in Social Security benefits over your lifetime?
Call Dennis Kagel at 309-454-9171 to receive a no-obligation and no-cost second opinion on your retirement planning.
As of the date of writing this article, I am in the process of transferring my securities license to a new RIA. Therefore, any advice or suggestions I may give you in connection with this article relate only to insurance products. If you need to sell or are considering the sale of or are in need of advice regarding the sale of any securities in order to have funds to purchase the insurance product(s) that I may recommend, you will need to do so independently. Any products that will be discussed in connection with this article will be limited to insurance products and other non-securities investment opportunities.
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