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Retirement Planning: 3 Steps to Get Back on Track


Odds are, you own some financial products, such as annuities, to help fund your retirement. But do you have a plan in place to retire? There's a big difference. Here are three steps to creating your retirement plan.

Image of a jar of coins labeled retirement

Chances are, you own some retirement products, such as annuities. But to get to retirement, you need a cohesive plan involving those products, not just the products alone.

Medical professionals are among the millions of Americans who confuse the financial products they own with having a retirement plan.

Unfortunately, most individuals don’t have a plan. Instead, they own a variety of products they’ve been sold by a commission-based financial advisor, broker or insurance representative — who often is a salesperson masquerading as a financial planner.

These products typically include annuities, a collection of uncoordinated mutual funds and brokerage accounts that hold a variety of stocks, bonds, exchange-traded funds or other investment vehicles. Sales people uncovered perceived needs and then sold products to fill them — or so the customers thought.

A financial product is not a retirement plan. A retirement plan is a well-thought-out blueprint for achieving specific retirement goals. The foundation of this blueprint is defining the retirement lifestyle you envision, as simple or as extravagant as that might be, and then putting a price tag on it. It is on this foundation that your retirement savings and investment strategies should be built.

Properly linking your retirement goals with your investment decisions is what true retirement planning is all about. The plan should come first, and then appropriate investment strategies can be designed and implemented to fulfill it. Then these strategies are monitored to ensure that your plan stays on track.

A well-crafted retirement plan takes into consideration all your sources of income in retirement, and accounts for the potential impact of federal, state and local taxes, particularly if you’re considering moving to another state (or even out of the country) when you retire. Also considered are the impact of inflation and a variety of hypothetical savings and growth rates on your retirement assets. Social Security maximization strategies are also important considerations. For self-employed medical professionals, retirement plans should include potential exit strategies from practices.

If you’ve acquired financial products without first designing a plan, you’ll most likely find yourself in a retirement lifestyle dictated by chance and circumstance instead of the one you could have had with thoughtful planning and a coordinated investment strategy.

The scenario of owning products without a plan is not unusual for busy physicians and dentists, who are often targets for financial salespeople and don’t take the time to plan. Failing to plan is common even among those who have far more free time than medical professionals, as planning involves attention, major decisions and commitment.

For the skittish, “plan” conjures up images of thick, oppressive binders, lots of grueling reading and puzzling through myriad complexities late into the night. It’s true that making financial plans involves some study and considerable reflection, but a good financial planner (preferably, fee-based) can help simplify the financial complexities of retirement planning and investing. He or she should help you focus on making smart financial and investing decisions — not on selling you financial products or offering complicated advice.

A financial planner can help you identify your retirement possibilities, which may include a series of rolling retirements, where you move from one passion to the next. Perhaps you want to teach, volunteer your expertise to charitable organizations or pursue other endeavors you’ve long dreamed about. This requires a plan that can adjust to your life and goals as they evolve.

If you own financial products but have no real plan, here are three steps to get on track to purposeful retirement planning:

1. Take an inventory of all your savings, investment products and other assets that you may rely on for income in retirement.

2. Reflect on how you see your retirement years unfolding — whether you see yourself following a traditional retirement path or a having a series of rolling retirements.

3. Contact a qualified financial planner specializing in retirement-income planning to help you determine how best to incorporate and/or adjust your existing retirement savings and products into a cohesive plan that will provide direction and meaning to your financial and investment decisions.

Buying financial products with no real plan can best be summed up by the exchange between Cheshire Cat and Alice in the classic “Alice’s Adventures in Wonderland,” “If you don’t know where you’re going, any road’ll take you there,” says the cat.

Alice’s response, “so long as I get somewhere,” applies, as you will certainly end up somewhere with the financial products you’ve purchased. But without a real strategy or plan, it most likely won’t be where you intended.

Eric C. Jansen, a Chartered Financial Consultant, is the founder, president and chief investment officer of Westborough, Massachusetts-based AspenCross Wealth Management, which provides fee-only retirement-income planning and investment management services for high-net- worth clients nationwide.

The information presented is not intended as financial advice, and you are encouraged to seek such advice from your financial advisor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money. Diversification/Asset Allocation does not ensure a profit or guarantee against loss. Registered Representative/Securities and Investment Advisory Services offered through Signator Investors, Inc. Member FINRA, SIPC, a Registered Investment Advisor. AWM is independent of Signator. One Technology Drive, Westborough, MA 01581. 026-20170403-361759

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