More and more people are trying to redefine retirement. Many are young professionals with good income trajectories and excellent savings habits. Their goal is to get Financially Independent and Retire Early, ideally sometime in their forties (the “FIRE” movement). The key question for them is: when will I be ready to make the leap?
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The purpose of financial planning is not to remove uncertainty or to predict your future financial situation with accuracy. The purpose of a plan is to help you maximize the value of your resources to achieve your goals. Setbacks are part of the game. They are an opportunity to revise your plan, reevaluate your goals and priorities, and push forward. No one expected a “2020,” but that’s what we got. The key to our success is what we do next. Let’s make what we are going through an opportunity to evaluate what we really care about, our values, goals, and priorities, and adjust our plan accordingly. Here is a selection of our blog posts to help you do that.
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Most retirees rely on multiple sources of personal retirement savings to generate retirement income. Besides Social Security, they typically rely on a combination of savings from tax-deferred accounts (TD), like 401(k)s and traditional IRAs, taxable brokerage and savings accounts (T), and tax-exempt accounts (TE) like Roth 401(k)s and Roth IRAs. The question is, in what sequence should we withdraw from the various accounts to generate more retirement income or make the portfolio last longer? Research shows that different sequences can have a big impact in the longevity of your savings. Take a look at our three step approach, featured on Retirement Daily.
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The interaction between the taxation of Social Security and other sources of retirement income can make your marginal tax rate jump in unexpected ways, even above the 37% rate, and at relatively low-income levels, an effect called the Social Security “Torpedo.” Avoiding the torpedo should be part of an efficient retirement withdrawal strategy. To do that, let’s review some basics of Social Security taxation.
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Equity compensation is becoming more and more popular. However, many employees have a hard time understanding the value of equity comp and how it should fit in their financial plans.
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