Retirement should be your reward for decades of hard work, raising a family, paying off debt, and accumulating assets for your retirement years. It’s fair to say that many of us dream of the day when we no longer have the pressure of the 8-to-5 job and daily commute. 

But with retirement comes new financial challenges that require an entirely new type of retirement plan. This is where the services of a reputable, experienced retirement planner can be of assistance. This professional’s role is to develop a retirement plan that addresses all the key financial elements that will impact you during your decades of retirement. 

Retirement planning in Chicagoland, or elsewhere, demands custom-tailored solutions designed specifically for you. Why? Because all pre-retirees are not the same, one-size-fits-all retirement plans do not work.

A cookie-cutter strategy software frequently overlooks the specific needs that make you unique. This leads to weak retirement plans, unnecessary expenses, and missed opportunities. For example, many of the canned retirement plans do not put enough importance on the risks that can derail the best plans. By their very nature, custom plans are a more comprehensive form of financial planning. 

Think of your retirement plan as buying a suit. A tailored fit looks better, feels more comfortable, and meets all your unique requirements.

When you hire a retirement planner, this professional should be more than just an advisor. The advisor should be your financial advocate who helps you sculpt a post-career life that incorporates all your circumstances, concerns, and goals into one custom-tailored plan for your retirement years.

Why SGL Financial? With our Four Pillar Retirement Plan, you can be confident that our highly qualified professionals will craft a customized retirement plan that looks at every facet of your financial life – now and in the future.

Then, we meet with you regularly to update your plan as needed. We are also available for impromptu meetings upon request. 

Retirement isn’t just about bidding farewell to your professional life; it’s about preparing for a new chapter that can span several decades. At the heart of your preparation is the development of retirement income planning. 

But why is it so critical?

During your working years, your main source of income was a salary. During your retirement years, your sources of income will be Social Security, IRAs, pension plans, annuities, and other types of investments and personal savings plans.

A full understanding of your various retirement income streams should be part of your retirement plan. Projecting their future valuations is part of the planning process. You certainly do not want any surprises that undermine the quality of your life. 

Also included in that plan should be a realistic accounting of the various expenses you will experience after you retire. Once all the numbers have been reviewed a realistic retirement income plan can be developed.

Listen to our popular podcast: “Mastering Your Retirement Income.”

Many outside factors can affect your retirement income. Let’s start with inflation.

Your retirement assets look healthy in your early retirement years. But over long periods, remember you could live to be 100, inflation erodes the purchasing power of your assets. Imagine saving enough for a comfortable lifestyle today, only to find those funds are insufficient 10 or 20 years later. This is where the expertise of a retirement income planner becomes invaluable. This professional can help develop a retirement income plan that has offset the erosive impact of inflation. 

Predicting your expenses in retirement requires some discipline. Many assume they’ll spend less in retirement, but travel, second homes, leisure activities, and unexpected healthcare costs can substantially impact these calculations. This part of your plan should be reviewed and updated annually – we want to minimize the surprises.

And therein lies the difference between retirement savings and retirement income. While savings is a lump sum accumulated over the years, retirement income is the flow of funds you withdraw each year to support your lifestyle and cover other expenses during your retirement years. Achieving a balance between money-in and money-out is vital for a long-term retirement plan.

Developing a steady income stream in retirement will require multiple strategies. This is where the importance of having a skilled retirement planner comes into play. This professional can craft a personalized plan that projects your income and expenses well into the future. 

Why SGL Financial?

We start by creating your baseline Retirement Plan Tracker (RPT), then customize it based on your income, expenses, concerns, tolerance for risk, and key goals. For example, we look for ways to increase your retirement income without taking on substantial additional risk. We also assist in creating an optimized withdrawal strategy to fund your lifestyle. The planner’s role is to provide a disciplined process that produces peace of mind for the rest of your life. 

Investing for retirement is about making your wealth work for you and preserving it so it continues to produce income in the future. We already described inflation as one form of erosion that must be planned for. Another is the taxes you pay on assets you have saved or withdrawn to cover your cost of living. 

That’s why it’s so important for your retirement planner to assist in developing tax-efficient investment strategies. Your retirement plan should ensure that your hard-earned savings grow in value and the erosive impact of taxes is minimized.

For many, the need for a retirement tax advisor becomes more apparent when you transition from working to retirement years. A financial advisor specializing in tax-efficient investment strategies can help you navigate the many taxes that impact your assets and income.

Tax-efficient investing is not just about maximizing returns but also about minimizing your tax liabilities. Whether it’s tax-deferred accounts, like IRAs, or tax-free distributions, like Roth IRAs, understanding where and how to invest and withdraw assets is pivotal.

Speaking of allocation, the role of asset location can’t be stressed enough. This involves placing investments in the right accounts based on their tax consequences. Done correctly, this can significantly improve after-tax returns and minimize the taxes you pay.

Lastly, there’s tax loss harvesting. This strategy can turn investment lemons into lemonade by utilizing investment losses to offset gains, potentially reducing tax liabilities.

Why SGL Financial?: As part of our Four Pillar Retirement Plan, we will review the efficiencies of your investments, including risk and return, tax consequences, and asset allocation strategy. We will also conduct a Fund/ETF screening process to ensure your investments are working for you properly. 

Understanding your tax situation after retirement should be a priority when transitioning from working to retirement years. There is a distinct possibility that your tax bracket may be higher after you retire. This possibility should be considered when you develop a plan for your transitional and early retirement years. Our role is simple – help you make smart decisions and minimize taxes.

One significant consideration is the sequence for taking withdrawals from your accounts. Deciding which accounts to access first is a strategic decision that can significantly impact your influence on tax liabilities. For example, traditional retirement accounts, such as 401(k)s and IRAs, distribute taxable income. Roth IRAs distribute tax-free income. Other accounts, funded with after-tax dollars, can also distribute tax-free income. How you take distributions to fund your lifestyle can significantly impact your tax liabilities. It pays to plan.

Another important component of retirement tax planning is associated with RMDs or Required Minimum Distributions. You must withdraw these minimum amounts from your retirement accounts annually, starting at 73. Failing to understand RMDs can result in hefty tax penalties, underscoring their importance in retirement tax planning.

Consider a Roth conversion if you believe you will be in a higher tax bracket post-retirement. When you execute a Roth IRA conversion, you move assets from a Traditional IRA (or another eligible retirement plan) into a Roth IRA. The crux of the process lies in the tax benefits. 

Your transfer amount will be treated as taxable income at conversion. In other words, you’re paying taxes now on the funds you move. However, once the money is in the Roth IRA and assuming you meet the qualified distribution criteria, future withdrawals are generally tax-free. 

This can be a strategic move, especially if you anticipate a higher retirement tax bracket or foresee government-mandated tax increases. Working with a tax professional is crucial for fully understanding tax consequences and the development of a strategy for tax minimization.

Why SGL Financial? Remember, the goal of tax planning in retirement isn’t just about minimizing taxes—it’s about maximizing the value of your hard-earned savings to fund your lifestyle in the future. Our team works with you to find ways to reduce your taxes now and in the future.

Leaving a legacy to heirs and charitable organizations ensures that the wealth you’ve worked hard to accumulate during your working years is distributed according to your wishes and values. For residents near us in Buffalo Grove, IL and across states nationwide, the legacy planning process is far more than just directing where you want assets to go – craft a plan that can benefit your loved ones and the organizations or causes you care about.

An effective estate plan has several important parts. The cornerstone is a current will, a legal document outlining your desires regarding property distribution upon the passing of one or both spouses. 

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However, wills aren’t the only tool for this purpose. Trusts offer a more flexible solution for some, allowing for the controlled distribution of assets, income, and potential tax benefits. The decision between a will and a trust is pivotal and highly personal. Partnering with an experienced estate planner can clarify the solution for your unique situation.

Of course, life’s unpredictability necessitates regular updates to your plan, especially regarding beneficiaries. Families grow, relationships evolve, and beneficiaries’ needs change. Annual reviews for updating this information guarantee your legacy continues to align with your current goals.

Lastly, charitable giving is an important facet of estate planning. By dedicating a portion of your estate to charity, you aid causes close to your heart and can significantly reduce estate taxes, thereby enhancing the impact of your legacy.

Why SGL Financial? Proper estate planning ensures your assets become your legacy for future generations and causes you want to support.

As part of our Four Pillars of Retirement Plan process, we will review your wills, trusts, Powers of Attorney (POAs), and beneficiary designations. We also coordinate with your legal team to ensure a smooth transition between your estate’s financial and legal aspects.

Pillar 1: Customized Retirement Vision and Goal Setting. Your retirement should reflect your unique aspirations and lifestyle choices. At SGL, we invest time in understanding your dreams and frame them into actionable strategies.

Pillar 2: Ensuring a consistent income flow in retirement is vital. We’ll guide you on maximizing your assets, optimizing Social Security benefits, and creating a cushion for unforeseen expenses, giving you peace of mind.

Pillar 3: No one likes paying more taxes than necessary. We’ll assist you in positioning your finances for tax efficiency while maintaining the flexibility to adjust as market and life conditions continue to evolve.

Pillar 4: Leaving a legacy concerns more than just the distribution of assets—it also involves values and memories. Our team aids in crafting a plan that ensures your legacy is preserved and passed on seamlessly.

The holistic approach at SGL embodies the essence of comprehensive retirement planning. It’s not just about numbers; it’s about developing a meaningful, secure, and comfortable retirement. Let us be your partner in turning those golden year dreams into reality.