Money & Career
Retirement Planning: It’s Outcome, Not Income
9/1/2019 1:00:00 PM
Retirement

Most Americans are pessimistic about how well off they’ll be financially when they reach retirement. A recent Gallup poll showed that only 48 percent of Americans expect they will have enough money in retirement. Those in their 50s were the least optimistic, with 42 percent in that age group saying they expect to live comfortably in retirement.


According to Marty DeRouen, Certified Financial Planner and Wealth Management Advisor at DeRouen Girola and Associates, their experience validates this perception. "We are definitely finding that this pessimism is common. The reason is primarily because individuals don’t have the information they need to figure out where they really are, nor the means to develop it themselves. In the absence of good data, the void results in fear and pessimism. It’s very common to see this pessimism turn to optimism once we’ve been able to work with someone, develop their vision of their retirement and then show them where they stand.”


Financial advisors strive to help retirees focus more on outcome than income.  While pre-retirees focus primarily on how much money they’ve saved for retirement, good financial planning also involves developing a vision and plan around the goals, lifestyle, activities and need for fulfillment in retirement, says David Girola, CFP and Wealth Management Advisor at DeRouen Girola and Associates. "Planning in those areas will help ensure people remain personally satisfied in retirement when they no longer have work to fill their time every day. It’s so important to realize that retirement success comes from being attentive to what someone gets out of retirement, not just how much money they get in retirement.”  


To improve the odds of a better outcome, future retirees should focus on the following:


Longevity. People are living longer, or certainly worry about living longer, but many advisors don’t recognize longevity as a risk. As an example, take a married couple who are both 65. There’s a 63 percent chance at least one of them will live into their 90s. Retirees who want to eliminate longevity risk should consider implementing a hybrid technique which will create lifetime income that will never run out. Some of the most financially satisfied retirees we have, says DeRouen, are the ones whose essential expenses are covered by guaranteed lifetime sources of monthly income, that being either Social Security, pension payments or income annuity payments. When lifetime guaranteed monthly checks come in the mailbox that equal what a retiree feels they need to cover expenses, they feel secure and are free to enjoy their time. It also allows them to invest some of their assets for a long retirement, which is very important, without worrying about market ups and downs.


Taxes on Social Security. Many people planning for retirement may not realize that Social Security counts toward their taxable income. If their income exceeds a certain level, they will be taxed. Staying below those income levels could be one option, but most people might not be able to live on such limited income. When planning retirement expenses, be sure to take taxes into account, and discuss with a financial advisor what your options might be for avoiding or at least limiting those taxes.


Consider working longer. One way to improve your income situation in retirement is to continue working, either full or part-time. That’s not possible for everyone because of health or other concerns. But for some people this can be a solution that allows you to both save more and postpone spending your savings.  "Once again”, says Girola, "when we work on the vision and personal satisfaction planning side of retirement, we often learn that when people feel like they don’t have to work at their old job anymore because they have become financially independent of it, they choose to work longer at something else but it’s doing something that is on their terms. That, of course, also supports a better financial outcome, also.”


For more information, contact DeRouen Girola & Associates, 127 W. Broad Street, Ste 600, Lake Charles, LA 70601, 337-437-7811, derouengirola.nm.com.

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