Create Your Retirement Plan

Everyone needs a retirement plan. Here’s what you need to know about your options and the steps to take.

  • Personalized Retirement Portfolios
  • Retirement Plan Types
  • Couples Planning for Retirement
  • Retirement Plans for Women
  • Self-Employed Individual Retirement Plans
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Personalized Retirement Portfolios

Your retirement portfolio should be built to suit your unique needs. Every person has different goals and needs for their money. You’ve worked hard to develop your nest egg. If you trust someone to manage your portfolios, they should do it like that money is their own.

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Retirement Plan Types

There are a nearly endless array of retirement plans. Each has its own advantages that serve the needs of a retiree. But which is best for you? That depends. Fisher Investments can help you build a customized portfolio that can become part of your retirement plan.

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Couples Planning for Retirement

You and your spouse or partner are a team. Your individual or joint retirement plans should serve both of your needs and can help protect your assets over time. As a couple, you should consider the process of establishing safeguards, maximizing returns, and setting yourselves up for financial success in retirement together.

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Retirement Plans for Women

Women face special challenges when it comes to their careers and planning for retirement. Certain retirement plans can help you determine how to maximize your retirement funds and plan for the long-haul. With a longer average life expectancy and other specific factors, Fisher Investments gives special consideration toward gender in our female clients.

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Self-Employed Individual Retirement Plans

As a self-employed individual, you may not enjoy some of the benefits of working for a business or larger corporation. Without an employer matched 401(k), for example, you may have other accounts and funds to consider when creating your retirement plan. A retirement professional can cut through the complexity and help you determine your best path forward as a self-employed individual.

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How to Make a Retirement Plan

While retirement planning can be overwhelming, making a retirement plan doesn’t have to be stressful. Planning for your financial goals can be easier get some help and tackle it in steps.

You want to retire, not think about how you are going to fund it. While it may feel better to wait until later, the earlier you implement your plan, the better. Compounding growth means the earlier you start, the more time your money has to grow. The longer you’re invested, the greater the probability of meeting your financial goals.

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Establish Goals and a Time Horizon for Your Retirement Plan

Identifying your financial goals and your investment time horizon is the first step in creating a financial plan. Specific goals create purpose for your retirement plan and give you a sense of the types of assets you’ll need to use.

An investment time horizon puts those goals in context. Many investors think their time horizon–that’s the length of time you need your assets to work for you or your family–stops at the day they retire. This is a common pitfall because an investor aiming to fund their retirement has a true time horizon of at least their lifespan. Investors may also need to consider their spouse, children, and other benefactors that may outlive them should they want to pass on their remaining assets.

Understand Your Expenses

Getting a handle on your lifetime expenses provides an idea of how much retirement will cost and what you need to fund it. To identify that number, it’s best to group expenses into non-discretionary spending (living expenses, debt payments, taxes, insurance and healthcare costs) and discretionary spending (travel, entertainment, gifts, etc.).

When accounting for non-discretionary spending, consider whether you plan on relocating in retirement. If so, explore living costs in the new area and calculate a moving fund should your savings require it.

Healthcare costs take a more sizeable financial commitment the older you get. When it comes to health, it’s best practice to overestimate the cost of health care and think long-term.

Discretionary spending is more variable and flexible than expenses like housing or taxes. These indulgences may come from saving for them, investment accounts, employee benefits, or employer obligations. Are you able to reduce or even eliminate these discretionary expenses if times get tough? Are you willing to make do with less? Anything that can’t be cut out should be considered non-discretionary and figured into your retirement plan.

Also factor in inflation. It can erode your purchasing power over time. Inflation averages ~3% a year for US consumers. Retirees can also face substantially higher expenses that grow faster than inflation. It’s a good idea to factor inflation’s effect into your calculations for your future expenses.

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Find a Representative Near You

For personalized and friendly assistance, contact a Fisher Investments representative in your area.

Evaluate Your Income, Investments and Retirement Accounts

Cataloging your income sources shows you how much money you’ll start with to pay for retirement expenses. Start by tallying your non-investment income: Social Security, pensions, residual business income, and earned income—if you or a family member plan to work part time, for example. The gap between this accumulated wealth and your expenses is what your investments must fill.

Next, incorporate your investments and non-cash accounts into your potential sources of income. Make sure you have a handle on the details of your potential pension payments, retirement account withdrawals, employer obligations, and other long-term sources of income.

After considering your investments and expenses, you will also want to consider the pool available to you that you earned during your career. As an employee, you may have received some employer match in a 401(k), IRA, or other retirement account. You may have also contributed to individual retirement accounts like an individual IRA or a Roth IRA. While these IRA options can provide cash flow, you need to have a handle on the difference between employer-sponsored accounts, tax-free accounts, self-employed individual accounts, etc. You also want to verify the age and size of any individual accounts, such as a Roth IRA or a self-managed retirement account.

Don’t forget to account for tax implications when considering these account options and withdraws. Each is different and comes with different tax payments or withdraw penalties if done at inopportune times. Fisher Investments may be able to recommend a tax expert that can help you determine the optimal asset allocation and withdraw schedule to keep your money in your hands.

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Manage Your Withdraws

The risk your retirement savings run out rises with the size of the gap between your income and expenses. You may think 10% annual withdrawals from an all-stock investing portfolio are sustainable because stocks have returned roughly 10% annually over time, for example. Unfortunately, the law of averages dictates this can significantly reduce your holdings. Equity returns aren’t assured to repeat in your retirement years—your retirement will have down years, and investing does come with some risk. Withdrawing heavily in those down or low-returning years can spell problems later, even if stocks do return their long-run average through your retirement years.

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Consider Social Security Benefits

Social Security comes with the complication of deciding when to start receiving benefits. The longer you can delay taking Social Security—up until age 70—the greater your benefit payments could be. You may be able to lean on an IRA, pension, or retirement savings before drawing your Social Security. Make sure you weigh the decision carefully when thinking about how to make your retirement plan since the early strain on your portfolio can increase the likelihood you deplete its assets. You don’t want to have to play catch-up when it’s too late.

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Review Regularly

Finally, don’t fret about getting everything exactly right. Your initial plan doesn’t need to be completely accurate. The more information you have available, however, the more realistic your assessment can be when deciding your path forward. Your retirement plan isn’t set in stone, either. Circumstances change—that’s life. That’s why retirement plans also require periodic review and updates.

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Remain Disciplined

Once you have a plan, the challenges aren’t over—you hopefully live for many years to come. You still must implement and then stick to the plan—both in budgeting and investment-strategy terms. Adjusting as circumstances change becomes a continual process. It requires ongoing attention and discipline. But, in crafting a retirement income and expense profile, you have taken a crucial first step towards a comfortable retirement.

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*As of 12/31/2021. Includes Fisher Investments and its subsidiaries.

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