Walli Miller’s journey to a comfortable and secure retirement is a testament to the power of early planning, strategic investments, and disciplined saving. Her story, featured on GOBankingRates, provides valuable insights into how following essential retirement planning steps can lead to a fulfilling retirement.
 
Early Retirement Goals
Walli set clear retirement goals with the help of a financial advisor, prioritizing saving and investing consistently. She aimed to retire by the age of 40 and worked diligently towards this goal. By starting early, she took advantage of compounding, allowing her savings to grow significantly over time.
 
Diversified Investments
To manage risk and maximize returns, Walli established a wealth management strategy that included diversified her investment portfolio across stocks, bonds, and real estate. This balanced approach helped her weather market volatility and ensured steady growth of her retirement funds. Her story highlights the importance of not putting all your eggs in one basket and regularly reviewing and adjusting your investment strategy. We would also add that diversifying how your assets are managed (active vs. Passive) is also an important consideration.
 
Conscious Lifestyle Adjustments
Walli collaborated with her financial advisor and made conscious lifestyle adjustments to free up more funds for retirement savings. She cut unnecessary expenses and lived below her means, which significantly reduced her living costs. These adjustments allowed her to save more aggressively and reach her retirement goals faster. Walli shared, “I retired from my 19-year career in public interest but have started a side hustle. I do not rely on that income, but it is a way for me to teach others to do the same and stay productive.”
 
Planning for Healthcare Costs
Understanding the potential financial burden of healthcare expenses, Walli included long-term care insurance in her retirement plan. This foresight ensured that she would not deplete her savings on medical expenses, providing her with peace of mind.
 
Creating a Spending Plan
A detailed spending plan helped Walli manage her finances effectively. She tracked her expenses, adjusted her spending habits, and ensured she lived within her means. This disciplined approach prevented overspending and allowed her to enjoy her retirement without financial stress. Walli mentioned, “I made adjustments along the way, but I have several years’ worth of history to notice which categories remained constant and which ones fluctuated the most and required flexibility.”
 
Staying Engaged and Active
Retirement for Walli was not just about financial security; it was also about maintaining a fulfilling lifestyle. She engaged in hobbies, volunteered, and stayed socially active, which enhanced her quality of life and kept her mentally and physically healthy. Walli stated, “I’ve used the same Excel spreadsheet since college and have the data to show how my income and spending have changed.”
 
Conclusion
Walli Miller’s story underscores the importance of early planning, strategic investments, and disciplined saving for a successful retirement. As we like to point out to clients, it is a series of little things, done consistently that make the difference in whether you reach your financial goals or not.

Most people lack the discipline that Walli demonstrated. For them, they may someone to guide them to reach their goals and that is where a good financial advisor can help.  If that's you?  Click the link below to get started today.

​Deciding when to start taking Social Security benefits is one of the most crucial financial planning decisions you will make as you approach retirement. The timing of your claim can significantly impact your financial well-being throughout your retirement years. In this blog post, we will explore why it is essential to determine the right time to take Social Security and how we can help you in making a more informed decision.
 
Why Timing Matters
 
The age at which you begin claiming Social Security benefits affects the amount you receive monthly. Here are some key points to consider:

1. Early Claiming Reduces Benefits: You can start receiving Social Security benefits as early as age 62, but doing so will permanently reduce your monthly payments. For example, if your full retirement age (FRA) is 67 and you claim at 62, your benefits could be reduced by up to 30%1.
2. Full Retirement Age (FRA): Your FRA is the age at which you are entitled to receive 100% of your Social Security benefits. This age varies depending on your birth year but is generally around 66 to 67 for most people1.
3. Delayed Retirement Credits: If you delay claiming benefits beyond your FRA, your monthly benefit amount will increase. For each year you delay, up to the age of 70, you can receive an increase of about 8% per year. This can result in significantly higher lifetime benefits, especially if you live longer2.
4. Longevity and Health Considerations: Your health and life expectancy play a crucial role in deciding when to claim Social Security. If you expect to live longer, delaying benefits might be more advantageous. Conversely, if you have health concerns, claiming earlier might make more sense.
5. Spousal Benefits: If you are married, coordinating the timing of Social Security claims with your spouse can maximize your combined benefits. Understanding spousal and survivor benefits is essential for optimizing your overall retirement income2.

 
How We Can Help

We use a powerful financial planning tool called RightCapital. This is a powerful financial planning tool that can help you navigate the complexities of Social Security claiming strategies. Here is how it works:

​RightCapital's Social Security Optimization module allows you to compare different claiming strategies and their impact on your retirement income. You can examine the income amounts and break-even points for various filing strategies, helping you make an informed decision3.
 
Here we can see the software has computed the optimal strategy for this sample couple vs. their current desired ages for claiming social security (i.e., 62 years of age for both spouses), the difference in claiming strategy benefits is substantial at $951,513 over their expected lifetimes.

​Obviously, longevity figures into this strategy and many clients will question at what age is there a crossover or breakeven in benefits. In the case of this sample client, that breakeven is at age 77. If their family histories led them to believe they would not live to age 77, this client would obviously opt to take their benefits early. However, as a rule, most U.S. persons are living longer, and medical advances continue to extend the age the average American will survive too.

​A comparison graph allows us to look at all the options outlined by the software and to make certain judgements based on the varied scenarios as there is no one right answer for all clients. 

Finally, we can look at Social Security claiming if for example that the client had an aggressive reinvestment plan for such payments that made taking the benefits early. In this example, let us assume the client was involved in private equity and these funds would benefit from reinvestment at return rates greater than 10% per annum.
​
In this case, the entire strategy is turned upside down and the couple then benefits from retiring earlier at age 67 for each (still not the early retirement they had initially desired).

Conclusion
Determining the right time to take Social Security is a critical decision that can have a lasting impact on your retirement income. By understanding the factors that influence your benefits and using tools like RightCapital, we can help you make informed decisions that maximize your financial well-being. Whether you choose to claim early, at your FRA, or delay until age 70, we can provide the insights and guidance you need to make the best choice for your unique situation.
​
Feel free to reach out if you have any questions or need further assistance with your financial planning and wealth management!
 
1Charles Schwab Guide on Taking Social Security 
2 The Motley Fool on Social Security Benefits 
3 RightCapital Social Security Optimization Tool

There is no better time to reexamine where you are financially than the new year!  Along with the more common goals to lose weight, work out more and take up some new hobby, planning for your financial future (or at least reviewing that plan) should be on everyone's list of the goals or priorities for the new year. 

Strangely, it is not all that common for Americans to have such planning.  According to the website Spendmnot, only 1 in 3 Americans have some kind of long-term financial plan.  According to the same site, 70% of Americans say their financial planning needs work.

Here at InTrust Advisors, we recently updated our financial planning software to RightCapital from another provider.  The switch was quite frankly about lowering our annual software cost, but RightCapital has won us (and the clients that we have worked with it so far) over.  It is simple to use and highly visual/intuitive.
 
The software provides clients with a clean looking dashboard/snapshot outlining important KPIs related to their finances including:

• The probability of success for the proposed plan.
• Their net worth.
• Their effective tax rate.
• A balance sheet of their assets.
• An asset simulation of their proposed plan.
• A tax allocation summary.
• Their current investment allocation.
• To dos/notes.

 
All in a clear one-page snapshot or dashboard.
 
Either with our help or in some cases on their own, you/we can then dig into each of these areas, make changes as appropriate for changing goals or circumstances, come up with action plans and more.    Here is what those Snapshot looks like for a sample client:

​Once the software profile information is updated for asset values, expected income, savings, financial goals and expenses, it gives the user a clear understanding of the probability of achieving those goals seen above at the Probability of Success or below as the Retirement Analysis (Current Plan).

In this sample case for a pre-retirement client, the current plan has a lower than acceptable probability of success than one would like at just 46%.
 
However, we made a few changes to the plan and, just like that, the probability of success rose to a more acceptable level of 84%.  
 
The action items tab above pulls down and here is where those changes are made in real-time while sharing information back and forth between the client and the advisor.  These changes are shown as the Proposed Plan below.

​In this sample case, the following changes were made to the base case:

• The monthly retirement expenses were cut from $8,000 to $7,000 on the back of less travel or maybe consolidating autos or any number of reasons.
• Pre-Retirement taxable savings assumptions were raised by $10,000 per annum. 
• Retirement ages were raised from 62 to age 67.
• The investment allocation was adjusted to a balanced approach. 
• Social security was optimized for the maximum benefit.
• A customized tax strategy was implemented.
• An updated Education strategy was also implemented.

 
The result was a clear plan and peace of mind for this client, and this is just a small subset of the capabilities of the software as we can dig deeper into such strategies as:

• Roth IRA conversion strategies
• Distribution strategies
• Social Security claiming strategies
• Insurance coverages and the adequacy of such coverages
• Savings strategies
• Spending strategies in retirement
• Investment allocations
• Estate planning
• and more.

Maybe we can help you gain the same peace of mind that a clear plan brings?

Click here to reach us and find out more

Ready to get started with RightCapital now?  It is free and easy to get started.  Click the link below to get started.

I recently have been reading a book by Bob Carlson called Where’s My Money?  The book is all about the exciting topic (sarcasm) of Social Security claiming and getting the most out of this important retirement benefit.
 
One of the topics of the book is the importance of checking your Social Security wage history. Bob Carlson makes the case that you should do so for two reasons:

1. To make sure your wage history is accurate and complete; and
2. To see if there are ways you can influence that history to maximize your Social Security Benefits.

 
Let us start with why your history is important.
 
Your earnings history is a record of your progress toward your future Social Security benefits. The Social Security Administration (SSA) uses your highest thirty-five years of earnings to calculate your benefit amount when you sign up for benefits.
 
If there are errors or omissions in your earnings record, you may not get credit for money you paid in payroll taxes, leading to lower future Social Security benefits.
 
You can maximize your benefits by:

1. Working at least 35 years and ensuring you have at least 35 years of earnings to maximize your benefit calculation.
2. Earn more if possible: Higher earnings contribute to a larger benefit amount.
3. Consider delaying claiming until age 70: Waiting to claim benefits until age 70 can significantly increase your monthly payments.
4. If you are eligible, consider claiming spousal benefits based on your spouse’s earnings history.
5. Know retirement earning limits: Be aware of how working during retirement can impact your benefits.
6. Remember, your Social Security benefits play a crucial role in your retirement planning.

 
After reading this section of the book, I checked my wage history and even developed a spreadsheet to see my 35-year average wage history (very nerd-like indeed). From here, I factored in my expected wages over the next several years to see how they will impact this average wage history.
 
I then logged into the Social Security website and on the home pages is a feature where you can see how future expected income through retirement affects your monthly social security payout.
 
To be honest, my expected income did not really move the needle of either my benefit in the future or my average wage base. My wages have been pretty consistent.
 
However, when I did this same exercise for my spouse, I found a different story. Because she was a stay-at-home mom for a number of years, her social security could be greatly influenced by a few changes to our plan.
 
The most obvious is she is now working in a job paying her more than when she was a stay-at-home mom ($0 in wages). Just by working a few additional years raises her wage base and average wage for those 35 years. Strangely enough, my wife did not like that idea since we had previously agreed she will stop working early in a little over a year from now.
 
In fact, it got quite chilly in the room when we discussed working longer!
 
Another option is to earn more. However, this is easier said than done in many cases.
 
I thought of a third option and that is, if you are self-employed, consider adding your spouse to the payroll so she can boost her Social Security wage record.
 
In my case since I am not a fan of additional taxes, I considered paying my spouse my salary and taking no salary. It would boost her wage record and have minimal impact on mine. The problem is I work in a regulated industry, and I could see myself facing possible scrutiny over wages, work, and licensing (i.e., she is drawing wages and is not a licensed adviser).
 
I ultimately decided to leave well enough and just hope my spouse finds some kind of part-time paying gig that might push her Social Security wage record up further before she reaches her full retirement age (FRA) at 67.
 
Let me quickly demonstrate the math here. Let us suppose your social security record says that based on your current wage record you will receive a benefit of $1,982 at your FRA. However, by raising your wages or working longer before retiring, the SSA projects your benefit can increase to $2,039 per month at your FRA.
 
You might say “who cares, that is just $57 more per month. That does not move the needle, Jeff.
 
However, I want to point out that that $57 per month over an estimated 23 years (to age 90) at 8% (what the SSA pays you in extra benefits for delaying) totals to more than $44,957.67 in extra benefits over that hypothetical period.
 
That in my opinion is real money and worth exploring!
 
Let us know how we can help you.

The end of any year is always a great time to take steps that can help improve your personal finances.

Here are some items to consider:

• If you're not retired or you have earned income, review your 2023 contributions to retirement accounts such as IRAs.
• If you or your spouse is 73 or older, Required Minimum Distributions (RMD) must be taken before Dec 31. Otherwise, you could incur an additional tax penalty.
• Make charitable contributions that you want to be able to claim as a deduction on this year’s tax forms.
• Compare this year's spending against your budget and make any necessary adjustments for next year.
• Do you expect to earn more next year? Consider putting all or part of your expected increase into savings.
• If you have the ability to control the timing of your income or expenses, consider paying deductible expenses in 2023 (such as state taxes subject to certain limitations) while deferring income (such as rental income or bonuses) until 2024.
• Check your asset allocation and make any necessary changes.  This may be the time to add additional exposure to alternative assets such as gold, commodities or hedge fund like managers as this cycle may require a broader asset allocation.
• Take some time to define your family's financial goals and concerns for next year:
  • Do you want to save more for retirement? Or for college?
  • Is a particular budget category consistently over-budget?
  • Do you expect any unusually large bills next year such as college tuition or a new roof?

 
Taking the time to address these items now can help make next year a great financial success.
 
Contact us if we can help you analyze your situation or achieve your investment goals.