Elements of Retirement Planning

Elements of Retirement Planning by retirement planning specialist Bill Roberts

If you are not yet retired (and maybe even if you are) there are things you need to know about planning for that (dreaded) day when you quit working (at your regular job).

Is it going to be a walk in the park? Or a part-time job at Wal-Mart greeting new arrivals?

Maybe you would like to have enough time (and money) to play golf, visit the grand kids, see Yosemite, do a little sailing, or just putter in the garden. That's what your parents did, so why not you?

Well, there are a lot of reasons, starting with the high cost of living, and ending with a very small social security check.

Something needs to fill the gap. That's where retirement planning comes in. It is not only your God given right to plan your own retirement, it is your duty. So you better get started.

Getting Started

Successful retirement planning includes several elements:

• Asset allocation
• Tax planning
• Mortgage planning
• Savings           
• Leverage
• Compound interest
• Goal setting
• Commitment
• Legal preparation
• Investment vehicles

The Recipe

What we want to do is pour all these things into a bowl and mix them up. It's kind of like baking a cake. Too much of one thing and not enough of another and the cake won't bake up the way we want it to. You also need to know what goes in first and what goes in last. Then it all has to bake a while. Raw batter in a bowl is not a cake.

I would start with a few tools: A yellow pad, a box of pencils, a calculator (a financial calculator if you have one), your checking account statements (every page of every month for the last few years), your last couple of tax returns, and possibly your letter from Social Security telling you how much you can expect to receive when you retire. If you have other assets you will want to know about those too.

Goal Setting

Setting your goal simply means establishing your needs when the great day comes. How much will you need to maintain your lifestyle, and how much more will you need for all those things you plan on doing in your golden years? See  Fun With Ken and Barbie

The rest of our goal setting is about HOW we are going to go about getting that money.

Commitment

Now that we have set our goal, we need to commit to getting there. It is not enough to know what we have to do. We actually have to do it. Your commitment will have to include SAVINGS.

Legal Preparation and Tax Planning

I don't want to say that this is a chicken or egg thing but it is. Which comes first hardly matters because they both do. You are going to need a full set of legal documents from a durable power of attorney for health care to an Inter-vivos  family trust and a few things in between. See Baby Boomer Retirement Planning 2 (a series)

Then you need to know the tax consequences of what you have just done, and how you want to utilize tax law to build your retirement nest egg.

All in all, you don't want to face this without a good attorney and a good accountant. If you don't have one then ask for a recommendation.

Mortgage Planning and Asset Allocation

Here is where the fun begins. We are talking about "growing" your assets up to a level that will sustain your goals which you have already set. Don't despair. All things are possible, even retirement.

Your mortgage planner will help you attain your goal utilizing financing, not just savings. A traditional financial planner can help you "manage" those monies you already have, but a good creative mortgage planner/real estate broker can help you grow your retirement accounts through LEVERAGE and COMPOUND INTEREST, using other people's money. This is the really fun stuff.

Compare

Compare that $100,000.00 that you already have invested in a mutual fund, ETF, or other Money Market account growing at 8% compounded annually

to that same $100,000.00 invested in a leveraged real estate investment growing at only 5% but on the entire property value, not just your 25% down payment investment:

You almost tripled your retirement account balance after ten years by one simple change. But that isn't the only change you should make. Your planner will help you establish workable goals and give you strategies for achieving those goals, including:

• Annual contributions to your IRA, 401(k), or Defined Benefit Plan utilizing money you are now giving to Uncle Sam in taxes
• Trading up to a larger property
• Using your house as a bank
• Land Banking
• Creating Wealth Through Use Change
• Investing in TICs, LLCs, and Tax Certificates

Your planner will help you to utilize different investment vehicles to both maximize your return and to protect your capital. It won't do you any good to amass several millions only to lose it to a judgment. See If You Buy Investment Real Estate What's The Most You Can Lose?

If you are ready to begin this process then call Bill Roberts at (619) 244-4610.