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Retirement Planning Through Different Seasons of Life

Retirement Planning Through Different Seasons of Life

August 03, 2023

Our August ‘firm focus’ is centered around bringing awareness about the importance of retirement planning. We believe it’s never too early to start planning for retirement and seeking the advice of a financial advisor can help you develop strategies to achieve your financial goals both now and in the future. 

A retirement plan is not one size fits all, and you will realize that the financial decisions you made when you were younger will not be the same as the ones you make later in life. Your financial plan should be adaptable and evolving, just like you and your family. By planning ahead and understanding your goals, you can maximize your retirement and enjoy all the opportunities it offers.

Here are the key differences in each phase of retirement planning you should consider. 

Young Adult Phase 
In this stage of the game, it’s all about establishing a good credit history, eliminating debt and creating a safety net. Investing in a retirement account (especially if your employer is willing to match your contributions) is also ideal but not the first step in getting your finances in order. Focus on paying off any high-interest rate debt and keeping it paid off as the first step, followed by establishing an emergency fund. Then you can begin focusing more heavily on your long-term financial goals.

Starting a Family Phase 
In this phase, planning for retirement becomes more critical. Expenses may grow as your family grows, and your cash flow could affect savings accumulation in your retirement accounts. Consider talking to a financial advisor about creating a comprehensive financial plan during this stage. As your finances become more complex, they can help identify the proper asset allocation, plan for college expenses for your children and other family needs, and potentially identify ways to accumulate wealth more effectively.

Peak Earning Phase 
In this phase, you will likely be at the peak of your career-earning years. Maximizing this increased earning potential is essential by getting aggressive in paying off debts (i.e., outstanding mortgage debt, car loans, credit cards, etc.) and increasing the percentage of your salary that goes into your retirement funds. In addition, this increased income can help you save an amount closer to the higher annual limits on retirement accounts. By now, you should be exploring what retirement goals you have for your family so you can start planning how much income you will need to support your lifestyle during retirement.

Nearing Retirement Phase 
Typically, individuals in this phase max out their working years at age 65, giving or taking a few years. At this point, it is equally essential to consider other factors that could impact your retirement. For instance, how will taxation affect your retirement income? Will you need long-term care benefits? You should also reassess the amount you have saved for retirement and determine if you need to increase your savings rate or alter your investment strategies to achieve your retirement goals. At DBHW Wealth Partners, we believe in a tax-smart approach to retirement planning – actively collaborating with our tax team in this phase so that we can adequately evaluate your savings.

Enjoying Retirement Phase 
You’ve reached a significant milestone and can even reinvent yourself — whether that means travel, enjoying time spent with family and on hobbies, or even exploring new careers. However, do not forget that to guarantee a prolonged retirement, it is necessary to balance your annual spending with your expected lifespan and the money you have saved up. This is a critical time to make sound financial decisions regarding withdrawing income and benefits. At this stage, reviewing your tax planning and income sources like social security, IRA withdrawals, stock dividends and real estate assets is essential.

Estate Planning 
Estate planning is the most critical stage in retirement planning. During this final phase, retirement planning shifts into advance planning and making decisions should go beyond maximizing assets. You’ll need to consider minimizing estate taxes, creating a comprehensive estate plan, and deciding how your assets will be distributed among your beneficiaries if you have not already. If you don’t have a will or updated estate plan, now is the right time to get everything sorted out.

Planning for retirement is a never-ending process that changes as we grow through life. Everyone’s ideas around retirement will differ, but with careful planning and knowledgeable decision-making, there is no reason to fall into worry or fear. 

Our mission at DBHW Wealth Partners is to provide support, trust and ongoing relationships when you become a client. Acting as a guide for you, we strive to bring you through all the ups and downs of life. This mission is driven by the idea that our relationship with you is full circle, and we help you take advantage of your greatest opportunities and confidently pursue your financial goals.

If you’re not yet a client but are interested in working with DBHW Wealth Partners, complete a contact us form, and we’ll be in touch soon.