Upticks: Financial Planning for Retirement

By Jake Falcon on January 22, 2021

Retirement planning looks different for everyone, especially as you progress through life and your goals change. However, regardless of where you are in your stage of life, the importance of a financial plan does not change. On this episode of Upticks, Jake gives retirement tips for early & mid-career investors, pre-retirees, and those who are already retired.

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Not surprisingly, retirement planning looks different for everyone. Here are some recommendations for anyone planning for retirement, regardless of where you are in life.

Early- and Mid-Career Investors

The most important financial lesson for people early in their careers is to start saving as soon as possible. Compound interest is on your side when you’re young, giving your investments time to snowball over the three or four decades before you retire. Even if you can only afford to save a little bit, it’s still critical. Investing, say, $1,000 at age 23 may have a similar impact on your retirement as investing $4,000 at 40.

A lot of people in their 20s and 30s, however, don’t have a financial advisor. And most advisors are compensated based on how much a person has to invest. This means young people, even those who make a nice salary, are often ignored by Wall Street and many advisors. At Falcon Wealth Advisors, we take a different approach. Our independent mindset allows us to chose who we work with and in what manner. As a result, for clients who do not reach our asset threshold, we offer a monthly retainer option where they receive all the attention and guidance a normal client does.

As I’ve said before in this space, creating and managing a financial plan is a big job and doing it well is a time commitment. If you don’t have dozens of hours a year to dedicate to financial planning, or a lot of knowledge on the subject, let us assist. Email me (jake@falconwealthadvisors) or James (james@falcolnwealthadvisors) and we can help make sure you’re on the right track to achieve your financial goals.

A final tip for young investors: automate when you can. It’s especially important to set up automatic contributions for your 401(k) or IRA. And set automatic bill pay when possible. Automation allows maintain discipline when saving for retirement; it helps you stay out of debt and reduces the risk of missing a payment, which can affect your credit score; and it saves you time, so you can focus on your career and family.

Pre-retirees

Most of our clients at Falcon Wealth Advisors are people in their 40s, 50s and 60s who are preparing for retirement. It’s very important for these clients to meet with us a couple times each year to review their financial plan and update it accordingly. A financial plan is not a roadmap set in stone; it’s a living, breathing document, and it can change as your life does. Reviewing it allows you to make sure you’re saving enough to have the spending ability you want in retirement. It also helps to reiterate the importance of making prudent financial decisions.

When a client is within a year of retirement, we often meet with them three or four times. We discuss social security, their investments, health care and health savings accounts, charitable donations and much more. This can lead to a smoother transition into retirement and leaves less open to chance.

We also discuss asset allocation with our clients during these meetings. Occasionally I meet with new clients in their 50s or 60s who are invested far too aggressively or not aggressively enough. We do all we can to help these clients make sure their portfolio is best positioned for growth while also preserving their capital. That’s why we like to keep any income a client will need in the next 5 to 10 years outside of the stock market, so that if there is a major market correction, our clients are able to wait it out and not sell their stocks at a low point.

Outside of money, it’s vital to have some understanding of what will be your purpose in retirement. A lot of people, especially men, find self-worth in their career. That feeling often ceases when you retire and it can be jarring for new retirees. I recommend thinking about how you want to spend your retirement before you retire.

While finance is our speciality, Cory and I have a lot of experience working with people as they near retirement and have even met with a life coach who specializes in working with retirees. If you need a sounding board as you think about how you will spend your time in retirement, don’t hesitate to schedule a meeting with us.

Retirees

A financial plan in retirement is just as important, if not more important, as it was before you retired. Cash flow is perhaps the most common topic we discuss when meeting with retired clients. We often see retirees spend more money in their 60s than in their 70s and 80s, as they’re traveling and pursuing hobbies. In our regular meetings with clients, we make sure their financial plan is built to accommodate the cash flow they’ll need not just for today, but for the decades to come.

It’s also important that your financial plan is set up to ensure you will be fine if you encounter any unexpected costs. An example: if you’re retired but not yet eligible for Medicare, let’s make sure you’re withdrawing enough each month to pay for appropriate health insurance, so that you don’t get stuck with a five or six figure bill if you undergo an unexpected surgery.

Finally, I advise clients to stay in the present and enjoy retirement. A proper financial plan can reduce anxiety for retirees, allowing them to have fun in retirement and not worry about if they’ll have enough money to last the rest of their life. I love hearing stories about new retirees volunteering, exercising, reading, and pursuing other passions, whether new or old.

After reading this, I hope you now have an even greater appreciation for the importance of a financial plan. If you would like to work with a team of financial advisors and planners who meet with you regularly to review your plan, please contact Falcon Wealth Advisors today.

Clients choose to work with us to enhance their financial literacy and explain exactly what their financial plan means to them.

-Jake Falcon, CRPC®