Couple saving for retirementWe spend most of our lives working and saving so that at some point we will have the financial freedom to step away from the grind and do something else.  Do you know if you are on track for financial security throughout retirement?

Just posing this question reminds me of our clients Brent and Wanda. When we began working together in 2005, they were about forty years old. As small business owners, their demanding schedules prompted them to aspire to retire early–preferably before turning sixty years of age. Their rationale was that since they devoted almost every waking hour to their business, they wanted the option to step away sooner rather than later, and start enjoying the money they were accumulating from all their effort.

When we met initially, Brent and Wanda were worried. They could easily identify their primary goal: retire, and when they wanted to reach it: before the age of sixty, but they had no idea what steps to take to accomplish it. Preparing financially to have enough income during retirement felt like an insurmountable task to them.

To fulfill their goal within the timelines they preferred, we began by creating a retirement game plan with three major steps:

  1. Identify their “number.”
  2. Implement a savings plan to attain their number.
  3. Design an investment portfolio.

Having agreed upon the strategic steps to take, it was time to dig into the details for each step. Read on!

Step 1: Identify their “number.” Brent and Wanda were diligent savers but had no idea how much to save to fully fund their retirement; in other words, their number. We began by establishing where they were financially, and followed that analysis by making projections for future income needs. To replace the income for their current style of living, aiming for financial security throughout retirement, we discovered that a minimum of $4.5 million would need to be accumulated in their retirement accounts.

Step 2: Implement a savings plan to attain their number. Once we identified their number, $4.5 million, it was time to calculate how much Brent and Wanda would need to save annually and in what type(s) of accounts. For instance, it is typical to maximize tax-deferred accounts for annual retirement savings. Business owners have a variety of such accounts, or retirement plans, to choose from. We recommended that this couple utilize a 401k and Profit Sharing Plan because these plans permit maximum savings for the future, in part by reducing current income tax liabilities.

Step 3: Design an investment portfolio. The right portfolio of investments makes all the difference in whether investors achieve their retirement portfolio goals, and achieve them on time! Disciplined asset allocation has been proven time and again to be the effective choice for achieving the results required to attain those all-important retirement numbers.

Follow the fantastic and successful example of Brent and Wanda. Contact us today to confirm that you are on track for financial security throughout retirement.

Tagged: Lindsay Briggs

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