By Scott Ford, CEO, Founder & Wealth Advisor of Cornerstone Wealth Management Group
Have you ever been so overwhelmed about planning for retirement that you didn’t know where to start? If so, you aren’t alone. More than 50% of Americans worry about not being able to maintain the standard of living they enjoy and 64% are worried about not having enough money for retirement. Here’s the truth: planning for retirement doesn’t have to be complicated. Follow these seven simple steps created by the Wealth From Wisdom Podcast to make a significant difference in your retirement finances.
1. Consider Alternative Investment Strategies
When creating your portfolio, don’t limit yourself to stocks. Create a diversified strategy to protect yourself from interest rate changes and market risk. While there are too many alternative strategies to list, two that are worth researching are bond ladders and real estate.
Creating a bond ladder simply means that you invest in bonds with different maturities. When one of your bonds reaches maturity, you roll over your investment into the most current bond issue. In this way, you can take the cash from your bond and pour it into the new bond that has a higher interest rate.
Purchasing a single family home, rehabbing it, and renting or selling it is also a strategy that isn’t dependent on the stock market. Find different opportunities that can create income and help you in the short-term, mid-term, and long-term.
2. Optimize Social Security
This is one area that can make or break your retirement finances. Did you know that around 10 billion dollars of Social Security goes unclaimed every year due to claiming strategies (or lack thereof)? There are so many rules, regulations, and loopholes that cause many people to claim Social Security in a way that results in thousands of dollars of loss. The reason this is so complicated is that everyone’s situation is unique. You need to claim at the right time, in the right way for you, not based on what anyone else is doing. This is where your wealth advisor comes in. Have them run a customized Social Security analysis to capitalize on your benefits so you get every nickel back that you can.
3. Create A Forward-Looking Strategy For Your Taxes
This is the optimal time to control your taxes. When working with CPAs and other tax professionals, you are often looking in the rearview mirror and analyzing prior year’s data. But when it comes to your retirement, you need to create a tax strategy that looks forward. Many people forget about taxes or dismiss them as unimportant, but if you don’t have a plan in place, you could miss out on money that will impact your retirement lifestyle. For example, if don’t have a plan for the sequence of your required minimum distributions (RMDs), you may be forced to withdraw money that will increase your tax bracket, thus lowering the amount you take home to live on. Find a CPA who will work with your advisor so all aspects of your finances are working together to maximize your money.
4. Manage Risk
You don’t find many people who get upset when they make more than they planned to make. If you protect the downside, the upside will take care of itself. How do you do this? Know how much risk you are willing to take and stick with investments that are in line with your risk number. Every investor’s risk preference is different, based on their unique situation and personality, and your advisor can work with you to make sure you aren’t taking more risk than you should be.
5. Protect Against Inflation
Inflation is known as the silent killer. No one pays attention to it until it’s too late. If you are saving for retirement based on your current expenses, you will run out of money sooner than you think. Create a retirement model with aggressive inflation estimates; if inflation doesn’t increase as high as expected, you’ll be in an even better position for your income needs. Also, you can’t expect to take all of the returns out of your portfolio and call it good. In order to keep your purchasing power moving forward, you need to have some “seed money” going back in to plant for future cost of living increases.
6. Check Up On Your Finances Regularly
We don’t live in a static world. If you aren’t moving as quickly as the rest of the world, you’ll be left in the dust. Create a plan for continuous dialog with your financial team so things like life changes, inflation, interest rates, and emerging technology are factored into your plan with the appropriate changes made. Complacency can kill your retirement. In this case, it’s not practice that makes perfect, but proactive preparation.
7. Surround Yourself With The Right Team
Don’t do this alone. Find an advisory team that will work together to make sure every aspect of your financial life is in order and on track to reach your goals. Your team can provide you with confidence and peace of mind that you will be taken care of in retirement. At Cornerstone Wealth Management, we have an experienced team under one roof, including wealth advisors, CFPs® and CPAs. Your advisory team should listen to you, understand your directions and what’s important to you, and execute your plan. We strive to do just that. We aim to be transparent in our communication and our fees and do everything we can to get you where you want to be. Following these seven simple steps now will put you in a position to find financial security in retirement. If you need help implementing these strategies, you can reach me by phone at (301) 739-8505 or by email at email@example.com.
Scott Ford is CEO, Founder and Wealth Advisor of Cornerstone Wealth Management Group, serving entrepreneurs, business owners, executives, and their families. The firm specializes in business liquidity strategies and SBA financing strategies. It is Scott’s mission to help his clients pursue financial freedom and live a balanced and fulfilled life.
Scott is a Wealth Advisor and Registered Financial Consultant (RFC). He was recognized as one of the 20 Rising Stars of Wealth Management by Private Asset Management Magazine in 2008 based upon assets managed of $1 million or more per client. Since 2005, Scott has been an active financial technical analyst.
Clients often choose to work with Scott because of his experience with the challenges business owners and executives face as well as his firm’s disciplined process. His personal and proactive approach is designed to bring clarity and simplicity to the complex issues of financial management. For over 20 years, he has been helping his clients define and pursue their own unique version of “True Wealth.”
Scott is the author of three books: Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances, The Widow’s Wealth Map: Six Steps to Beginning Again, and the New York Times Bestseller, The Sustainable Edge: Fifteen Minutes a Week to a Richer Entrepreneurial Life.
He and his wife, Angie, reside in Hedgesville, WV and have two wonderful children as well as a dog and a cat. In addition to spending time with his family, Scott is a voracious reader and enjoys woodworking, Brazilian Jiu-Jitsu, golf, hunting, permaculture and beekeeping; basically anything outdoors.