CRITICAL MISTAKES TO
AVOID IN RETIREMENT

CRITICAL MISTAKES TO
AVOID IN RETIREMENT

CRITICAL MISTAKES TO
AVOID IN RETIREMENT

CRITICAL MISTAKE #1 

Taxes

There is a very practical aspect to taxes. Many of the decisions you make in retirement will have tax implications. The new tax law of 2017 impacts many of these decisions. Whether or not you use a professional to look forward at those implications is your prerogative. It is important to understand how taxes are different in retirement and how to avoid some very common tax pitfalls.

Important concepts you will need to have a basic understanding of include personal deductions, marginal tax rate, capital gains and qualified dividends, RMDs, filing strategies, tax credits, Medicare and taxes/income, and taxes on Social Security benefits. Failure to recognize the challenges of taxes in retirement can have dire consequences for not only you but your beneficiaries as well.

You may not consider yourself a net high-income earner but RMDs and Stock distributions in any given year can have dramatic consequences in coming years and impact the premiums you pay for Medicare or the amount of your Social Security benefit you pay taxes.

There is an old saying that this or that is as certain as death and taxes. In death you (or your estate) can not get away from taxes. Even if your estate is well below the minimum exemption limits, your loved ones could be subject to devastating taxes unless you have properly prepared your financial affairs. At Romero Retirement Strategies we work with tax professionals to help you plan taxable income to minimize adverse tax issues.

-Fill out the form here to download and read the entire report-

Submit the form to download this FREE guide!

CRITICAL MISTAKE #1

Taxes

There is a very practical aspect to taxes. Many of the decisions you make in retirement will have tax implications. The new tax law of 2017 impacts many of these decisions. Whether or not you use a professional to look forward at those implications is your prerogative. It is important to understand how taxes are different in retirement and how to avoid some very common tax pitfalls.

Important concepts you will need to have a basic understanding of include personal deductions, marginal tax rate, capital gains and qualified dividends, RMDs, filing strategies, tax credits, Medicare and taxes/income, and taxes on Social Security benefits. Failure to recognize the challenges of taxes in retirement can have dire consequences for not only you but your beneficiaries as well.

You may not consider yourself a net high-income earner but RMDs and Stock distributions in any given year can have dramatic consequences in coming years and impact the premiums you pay for Medicare or the amount of your Social Security benefit you pay taxes.

There is an old saying that this or that is as certain as death and taxes. In death you (or your estate) can not get away from taxes. Even if your estate is well below the minimum exemption limits, your loved ones could be subject to devastating taxes unless you have properly prepared your financial affairs. At Romero Retirement Strategies we work with tax professionals to help you plan taxable income to minimize adverse tax issues.

Submit the form to download this FREE guide!


Submit the form to download this FREE guide!

CRITICAL MISTAKE #2

Risk Tolerance

In the early stages of the accumulation phase of our financial lives our principal objective was to make more money. One of the first things we learned in Personal Finance 101 was the concept of compounding. The fact that we could earn interest on the interest that we earned when heaped upon the interest we had earned before that, and it was intoxicating. We were keen to take on greater risk because we had plenty of time to get back the gains we lost to the market. Intoxicating, because the good years were like a money drug and the bad years seemed to be few, rare and distantly removed by time.

This dependence on compounding drove us to raise the expectations of what our income funds would amount to in retirement. Over the past decade the S&P 500 had averaged more than 13% per year and there seems to be no reason to change our philosophy going into retirement. If it worked for 40 years of our working lives it should work for another 25 years, right? Well, maybe not so. Studies show that people that retire at the peak of bull market have a greater chance of out living their money.

While everyone understands and revels in the accumulation phase of their financial lives, many may not be aware of the next phase: the preservation phase. This phase should begin about five years before our targeted date of retirement. This is the phase where we take the steps necessary to ensure that funds we worked hard to accumulate, sometimes through considerable risk, are available to us to use as income during the next phase of our financial life: the distribution phase.

-Fill out the form here to download and read the entire report-

CRITICAL MISTAKE #2 

Risk Tolerance

In the early stages of the accumulation phase of our financial lives our principal objective was to make more money. One of the first things we learned in Personal Finance 101 was the concept of compounding. The fact that we could earn interest on the interest that we earned when heaped upon the interest we had earned before that, and it was intoxicating. We were keen to take on greater risk because we had plenty of time to get back the gains we lost to the market. Intoxicating, because the good years were like a money drug and the bad years seemed to be few, rare and distantly removed by time.

This dependence on compounding drove us to raise the expectations of what our income funds would amount to in retirement. Over the past decade the S&P 500 had averaged more than 13% per year and there seems to be no reason to change our philosophy going into retirement. If it worked for 40 years of our working lives it should work for another 25 years, right? Well, maybe not so. Studies show that people that retire at the peak of bull market have a greater chance of out living their money.

While everyone understands and revels in the accumulation phase of their financial lives, many may not be aware of the next phase: the preservation phase. This phase should begin about five years before our targeted date of retirement. This is the phase where we take the steps necessary to ensure that funds we worked hard to accumulate, sometimes through considerable risk, are available to us to use as income during the next phase of our financial life: the distribution phase.

Submit the form to download this FREE guide!


CRITICAL MISTAKE #3 

Social Security

When surveyed, more and more retirees are stating that their most valuable asset in retirement is Social Security. It also is the part of retirement planning that generates the most questions and can be the most confusing. It is no longer just a matter of “when do I take my benefit”. Your retirement date and the date you begin your Social Security benefits do not have to be the same. However, making certain decisions concerning Social Security can cost you tens of thousands of dollars in retirement.

Social Security provides a foundation on which to build retirement security. However, Social Security benefits were never intended to be someone’s sole source of income in retirement, these benefits must be supplemented.

They can however, account for up to 60% of some people’s income in retirement and needs to be planned for like a separate asset class. This is a guaranteed income stream and can play a more significant role in the later years of retirement than the early years as other income sources start to drawdown. Planning on how and when to address Social Security is an important part of our client’s investment strategy.

How are my benefits taxed? What about spousal benefits? Won’t my Spouse get have my benefit? If I die, what benefit does my spouse get? Can I File on my ex’s benefit? Should I take my benefit early? So many questions and yet the Government can not give you Social Security strategy planning advice. And 78% of financial professional do not have a working knowledge of Social Security. At Romero Retirement Strategies we have taken the continuing education that places us in the 22% of advisors looking out for your entire best interest.

-Fill out the form here to download and read the entire report-

Submit the form to download this FREE guide!

CRITICAL MISTAKE #3

Social Security

When surveyed, more and more retirees are stating that their most valuable asset in retirement is Social Security. It also is the part of retirement planning that generates the most questions and can be the most confusing. It is no longer just a matter of “when do I take my benefit”. Your retirement date and the date you begin your Social Security benefits do not have to be the same. However, making certain decisions concerning Social Security can cost you tens of thousands of dollars in retirement.

Social Security provides a foundation on which to build retirement security. However, Social Security benefits were never intended to be someone’s sole source of income in retirement, these benefits must be supplemented.

They can however, account for up to 60% of some people’s income in retirement and needs to be planned for like a separate asset class. This is a guaranteed income stream and can play a more significant role in the later years of retirement than the early years as other income sources start to drawdown. Planning on how and when to address Social Security is an important part of our client’s investment strategy.

How are my benefits taxed? What about spousal benefits? Won’t my Spouse get have my benefit? If I die, what benefit does my spouse get? Can I File on my ex’s benefit? Should I take my benefit early? So many questions and yet the Government can not give you Social Security strategy planning advice. And 78% of financial professional do not have a working knowledge of Social Security. At Romero Retirement Strategies we have taken the continuing education that places us in the 22% of advisors looking out for your entire best interest.

Submit the form to download this FREE guide!


Submit the form to download this FREE guide!

CRITICAL MISTAKE #4

Medicare

On the surface it may seem as a pretty simple proposition; When you reach age 65, you get Medicare. And if it were that simple then it would not be on the list of mistakes to avoid in retirement. The decisions you will make in on Medicare could be some of the most important decisions you will make. Understanding the basics of Medicare could help you avoid critical mistakes. It is estimated that the average person will accrue upwards of over $300,000 in medical expenses in retirement.  Understanding what Medicare pays and when it pays it, could help to eliminate a great deal of these projected expenses.

Medicare will not pay all the medical cost you incur during your retirement years.  There are insurance options available which can pay most of these costs. One plan does not fit all consumers and the plan your neighbor bought might not necessarily be the best plan for you. Choosing the right supplemental plan can help preserve valuable retirement dollars.

If at age 65 you are still working, you may want to investigate the option of delaying your Medicare Part B benefits. If you are ten years out from being eligible for Medicare but do not qualify for Part A without paying premiums, now is the time to find out how to bridge this gap. You should purchase prescription coverage or Part D even if you do not take premiums. At Romero Retirement Strategies we are well acquainted with Medicare and it’s many parts, and can be invaluable resource in assisting you ensure that your money out lives you.

-Fill out the form here to download and read the entire report-

CRITICAL MISTAKE #4 

Medicare

On the surface it may seem as a pretty simple proposition; When you reach age 65, you get Medicare. And if it were that simple then it would not be on the list of mistakes to avoid in retirement. The decisions you will make in on Medicare could be some of the most important decisions you will make. Understanding the basics of Medicare could help you avoid critical mistakes. It is estimated that the average person will accrue upwards of over $300,000 in medical expenses in retirement.  Understanding what Medicare pays and when it pays it, could help to eliminate a great deal of these projected expenses.

Medicare will not pay all the medical cost you incur during your retirement years.  There are insurance options available which can pay most of these costs. One plan does not fit all consumers and the plan your neighbor bought might not necessarily be the best plan for you. Choosing the right supplemental plan can help preserve valuable retirement dollars.

If at age 65 you are still working, you may want to investigate the option of delaying your Medicare Part B benefits. If you are ten years out from being eligible for Medicare but do not qualify for Part A without paying premiums, now is the time to find out how to bridge this gap. You should purchase prescription coverage or Part D even if you do not take premiums. At Romero Retirement Strategies we are well acquainted with Medicare and it’s many parts, and can be invaluable resource in assisting you ensure that your money out lives you.

Submit the form to download this FREE guide!