Stable, tax-efficient Income: Developing Integrated Retirement Planning

Are we out-smarting ourselves about retirement planning? 

According to our personal study of the financial services industry we looked at the plans of 450 successful individuals between the ages of 45 and 65 with assets from $1MM to north of $10MM. Most of us express confidence in a financial plan projecting 8% in long-term asset growth. Of course, everyone feels pleased with this type of result. Who wouldn’t be? 

Yet the rate of return alone, however, does not tell the whole story about retirement planning. Solely emphasizing a return on assets won’t buy retirement happiness. You, or your financial manager, can keep your assets under management, and dribble out interest income and mandatory distributions. But this is not the only concern.

To get some more insight, let’s dive into other aspects of our findings. We found the respondents’ number one goal remains stable, and tax efficient*, retirement income. Those surveyed don’t care if income is generated by the stock market, municipal bonds, real estate, cash-value life insurance or, from a gold mine they’ve found under a rock. Of course, maintaining good health and the cost of healthcare is the #2 concern. But, the third highest concern centers on the impact of increasing taxes and inflation in maintaining lifestyle. Many understand that conventional wisdom which holds that retirees will enjoy the high life, earning less income but paying fewer taxes, may be wrong. Inflation could push all of us into a higher marginal income tax bracket that can stall the process of equalizing lifestyle net of inflation.

The number four concern came in as an overwhelming fear about ensuring business continuity (of course, this is a much higher priority for single business owners). Legacy planning rounds off this list, showing up as the fifth highest concern expressed among participants. 

What may be missing in the existing plans, however, is the development of a framework or plan that integrates the resolution of all of these interlocked goals. While everyone understands the need for excellent returns, the participants in the study could not connect the dots, expressing little understanding of the ramifications and tradeoffs that must be considered in apportioning financial resources to one strategy vs. another.

What the results point to – is a need for change. It is time for all of us to connect the dots. Each one of us should plan for retirement by first recognizing all of the variables we’ve got to take into account. Start taking the same care with planning for the various uses of your income, including your income tax liability; otherwise you may not realize your retirement dreams.

No matter what your particular financial picture, it’s time to start asking the right questions about your retirement future, and create a plan with your financial advisor that integrates all aspects of your financial planning. Applying this research to your unique situation is easier than ever with new planning tools and strategies available to complement the hard work you’ve done to date.

*Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Russ Financial Group is not an affiliate or subsidiary of PAS or Guardian. CA Insurance License #0F70935  2020-104440 Exp. 7/22