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5 Reasons to Have a Retirement Income Plan


The Value of a Financial Advisor: Unlocking Financial Success and Peace of Mind

June 04, 2023

It is not unusual for people, from the time they start working, to have an age in mind at which they would like to retire. As the years go by and they begin to get closer to the age they have been dreaming about, some people take the time to plan (either on their own or with the help of a professional) to ensure they will have the financial resources to stick to that age or adjust their plan if needed.

Unfortunately, many people do not plan. Basically, they jump into the retirement pool without knowing if there is enough water in it. Sometimes it works out okay, but it can also result in a less desirable lifestyle (or potentially a much worse situation) during retirement.

Here are five reasons why you should have a retirement income plan:

1. Your income sources must provide the amount you need and desire - Social Security will probably not provide enough income. If you will be receiving income from an employer-sponsored pension plan, you are fortunate. Most people will need/want income from their own personal savings and investments and there are several strategies that can be used to provide it.

2. You may live longer than you think - While average life expectancy from birth is about 74 (males) and 79 (females), for individuals who reach age 65 it is 81 and 84 for males and females, respectively. But these are averages and 50% of people are likely to live longer. Recent studies have shown that more people are now living well into their 90's. Check out the Actuaries Longevity Illustrator website, longevityillustrator.org, to get an idea of how long you may live.

3. Your future expenses may be higher than you expect:

  • Inflation will continually increase the cost of many goods and services and some expenses such as medical care historically increase at a higher-than-average rate.
  • You may spend more on discretionary lifestyle expenses.
  • You may incur higher than expected out-of-pocket healthcare costs. Even if you are of average health or better, original Medicare (Part A, B, D) with a Medigap policy, and Medicare Advantage Plans do not cover everything (e.g., there are deductibles, co-payments, and non-covered costs for such needs as dental, vision, and hearing).
  • You are likely to incur long term care expenses in your elder years. Over 50% of people will incur home or facility-based long term care expenses. While the average need is about 3 years, you never know what your situation will be. Alzheimer's or Dementia can result in the need for custodial care for many years. Paradoxically, people with above average health who live long lives are the ones more likely to incur higher long term care costs.

4. Taxes may be higher than you expect - Unless Congress acts, individual rates will be returning to higher, pre-2017 levels when the lower tax rates in the Tax Cuts and Jobs Act of 2017 "sunset" in 2025. Tax rates further into the future are unpredictable. In addition, your Required Minimum Distributions (RMD) will be taxed as ordinary income. There are tax planning strategies to locate different types of investments in taxable, tax deferred (e.g., 401k, traditional IRA), and tax free (e.g., Roth 401k, Roth IRA) accounts for tax efficiency.

5. Investment assets must be positioned effectively - The days of converting all investments to bonds at retirement and living on interest income for the duration of your life are long gone. Most people must deplete the principal over time. Also, longer life spans generally necessitate positioning a portion of investment assets for growth. There are numerous strategies for managing investments during retirement.

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!


To Be or Not to Be an Executor

About the author

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Steve B. Goldstein

Vice President, Private CFO®

Steve Goldstein is Vice President, Private CFO® with oXYGen Financial, Inc., and is based in Alpharetta, Georgia. Steve holds the Certified Financial Planner, Chartered Retirement Planning CounselorSM and Retirement Income Certified Professional® designations.

He is a 20-year veteran in the financial services industry and specializes in helping Baby Boomers and older Gen X'ers plan and manage their finances as they transition and live in retirement.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Background and qualification information is available at FINRA's BrokerCheck website.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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