Roosevelt Investments is now CI Roosevelt Private Wealth

RWM – Retirement Planning

Getting Ready
for Retirement


Our CERTIFIED FINANCIAL PLANNER™ professionals can help chart your course to retirement. Our goal: to guide you towards your long-term objectives and to ensure you maintain financial security along the way.

We work with clients to navigate every phase of the retirement planning process: saving, investing, tax planning, and cash flow management. The guidance and preparation we provide our clients is focused on two phases of retirement planning: accumulation and distribution.

Phase 1: Accumulation

Save, save, and save some more.

Accumulating assets and building wealth over time starts in our working years, when we can set aside income to finance our retirement down the road. Roosevelt recommends trying to save as much income as possible throughout your working years (20% of your income is a good goal), and we can help you determine where those dollars should flow:

  • 401(k)s
  • IRAs
  • Roth IRAs
  • Simple or SEP IRAs
  • Taxable Brokerage Accounts
  • 403(b)s
  • And more
Accumulating Assets and Building Wealth

How Do You Know You’ve Saved Enough?
We Can Guide You in 3 Steps.

Step 1: Create a Detailed Map of Your Annual Income Needs in Retirement

It starts with a simple question: “If you were to stop working today, how much monthly income would you need to maintain your family’s ideal standard of living?”

It’s helpful to divide your answer into three categories:

  • Monthly Revolving Income Needs – make a list of your monthly outlays, including mortgage payments, utilities, tuition, credit card payments, insurance premiums, subscriptions and memberships.
  • Monthly Discretionary Income Needs – spend a few months tracking how much you pay for discretionary items like groceries, gas, retail purchases, and entertainment. After a few months, calculate the average amount you spent.
  • Annual Miscellaneous – consider what you’d like to set aside each year for items or activities you love, like traveling.

Monthly Revolving Income NeedsMake a list of your monthly outlays, including mortgage payments, utilities, tuition, credit card payments, insurance premiums, subscriptions and memberships.

Monthly Discretionary Income NeedsSpend a few months tracking how much you pay for discretionary items like groceries, gas, retail purchases, and entertainment. After a few months, calculate the average amount you spent.

Annual
Miscellaneous
Consider what you’d like to set aside each year for items or activities you love, like traveling.

Putting these spending factors together, the end-goal is to arrive at a monthly number-in today’s terms and in today’s dollars – providing for your family’s lifestyle needs.

Step 2: Adjust Your Living Expenses Higher Over Time

Once you have a monthly income number, your next step is to apply it over your and your spouse/family’s lifetimes, so you can arrive at a “lifetime income number.” In economic speak, you are calculating the present value of your future income needs.

To paint an accurate picture of your lifetime income needs, there are a few key factors you should consider:

$300,000+

The cost of health care is rising. According to Fidelity, in 2020 “it is estimated that the average 65-year-old couple will need $295,000 in today’s dollars for medical expenses in retirement, excluding long-term care.” Over the years, that number is likely to rise, which should be factored into your retirement plan.

Adjust Living Expenses

$300,000+

The cost of health care is rising. According to Fidelity, in 2020 “it is estimated that the average 65-year-old couple will need $295,000 in today’s dollars for medical expenses in retirement, excluding long-term care.” Over the years, that number is likely to rise, which should be factored into your retirement plan.

85+

People are living longer, and medical breakthroughs of the future are likely to push life expectancy out even further. The takeaway: make conservative estimates when planning how long you’ll need retirement income. The Social Security Administration has a helpful calculator to help you estimate your life expectancy: Calculate Life Expectancy.

2-3%

Inflation has been running below 2% for the last decade, but as you can see in the chart below, inflation has not always been this low. With high levels of government debt and low interest rates, inflation could return in the future. Your retirement plan should take it into account.

Accumulating Assets and Building Wealth

Step 3: Run a Monte Carlo Simulation

The final step in the process of determining your lifetime income need is to run a Monte Carlo simulation, which uses computer models to reverse engineer how much money you need – and how you should invest it – to ensure you can generate enough retirement income throughout your lifetime. The Monte Carlo simulation looks at various market outcomes and cycles, versus assuming your money will grow at a fixed annual rate.

Are You Ready to See How Retirement Ready You Are?

Contact Us Today for a Free Retirement Analysis

Phase 2 of Retirement Planning:
Distribution

Once you approach and reach retirement age, it is time to shift from accumulation mode into distribution mode. It’s time to generate income from your investments.

3 Options for Generating Investment Income:

1. Fixed Income

Fixed income portfolios as portions of multi-asset strategies are valuable for their ability to protect principal and provide predictable cash flow.

U.S. Treasuries are the safest bonds, but they also pay low yields. Retirees may need to look further out on the risk curve: investment grade corporate bonds, municipals, or even non-U.S. bonds.

2. Preferred Securities

Preferred securities offer another income-generating alternative and are often considered ‘hybrid securities’ because of their similarities to both equity and debt instruments. With preferred securities, the issuer promises to the investors fixed income payments over time (in the form of fixed dividends).

As with bonds, an investor in preferred securities can expect to receive regular payments over time with the full “par value” – another term for principal – returned when the securities mature or are redeemed by the issuer. In some cases, the dividends are ‘qualified’, meaning that they receive special tax treatment, which can make their after-tax yield more attractive.

3. Dividend-Paying Common Stock

In some cases, the yield on common stocks can reach 4-5%, which is quite competitive in a low interest rate environment. Many of the most consistent dividend payers are large-cap or even mega-cap stocks, and those stocks often operate in global markets. Owning these multinational companies can mean giving your portfolio some international exposure, without having to buy companies domiciled in other countries–a diversification perk. Of course, owning common stocks can expose an investor to the risk of a declining stock market.

Your Income Needs Will Determine How You Invest.

CI Roosevelt Private Wealth Can Guide You.

Speak With an Advisor Today

Taxes Also Play a Role in How You Generate Retirement Income


Most retirement strategies also involve some level of tax strategy. The table shows different ‘pools’ of money that can be utilized to generate retirement income. With the right plan, a retiree can have greater control over their income tax liability.

Missing from the list is Social Security Income, which may be taxable for some retirees. Social Security income becomes taxable when you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return). According to the IRS, you will pay tax on a maximum of 85% of your Social Security benefits.

Retirement Chart

Missing from the list is Social Security Income, which may be taxable for some retirees. Social Security income becomes taxable when you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return). According to the IRS, you will pay tax on a maximum of 85% of your Social Security benefits.

Accumulating Assets and Building Wealth

Determining Your Asset Allocation


Going through all the above steps—and determining your long-term financial goals, objectives, and tolerance for risk—will ultimately determine your portfolio’s asset allocation over time. This ongoing asset allocation decision is the most important one your investment advisor will make for you, and CI Roosevelt Private Wealth has the experience and expertise to get it right.

GET RETIREMENT READY TODAY

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