Many people talk about their retirement account as it if is their retirement plan. For example, you may be enrolled in a 401(k) plan, but it’s just an account that holds your retirement funds. A retirement account is not a retirement plan.
What Is a Retirement Plan?
A full retirement plan addresses all of these issues:
- Retirement income planning. You can draw income from Social Security, pensions, annuities, investments, business ownership, and rental properties. When you choose to turn on these different income streams will affect your income, your taxes, and your estate plan.
- Investments. Which investments should you hold? What types of accounts should you hold them in? Should you move money between investment accounts? These are just a few of the questions around investments in retirement.
- Health insurance and healthcare costs. Can/should you continue with group or private insurance? Or should you enroll in Medicare? Is that Medicare Part A, Medicare Part B, or Medicare Part D? Or do you need a Medicare Advantage program, or Medigap insurance? Your income can affect how much all of this costs, as well.
- Long term care insurance. Do you need long-term care insurance? Can you afford it? Can you afford not to have it? If you get long-term care insurance, you will need to think about premium payments, elimination periods, coverage limits, and more.
- Charitable giving. If you want to give money to charity, what’s the most efficient way to do it? Can you use qualified charitable distributions? Do you need a donor-advised fund? Should you give cash or should you give investments or should you give property?
- Tax planning. Every single decision you make about everything else will have consequences for your taxes.
A Retirement Plan is a Full Financial Plan
When you think about all of these different parts, you realize that a retirement plan really is a full, personalized financial plan for someone who is in or near retirement. At younger ages, your financial plan should make some considerations for your retirement, but as you get closer to retirement, those considerations should be more detailed and more prominent.
At Dominion Financial Advisors, we help you replace deferred, delayed, and avoided decisions with informed and guided actions. Schedule a complimentary consultation with us to see how we can work together to plan your financial future.