At advisorRETIRE we are the experts in succession planning for financial advisors. Our experts will partner with you to navigate a succession plan, ensuring the future is secure for all involved. Contact us today to let us know how we can work with you.

Putting plans in place for succession, no matter where you’re at in life is the surest way to ensure your business continues after you die. Additionally, it will ensure protection for your family and heirs once you pass away. Here are some tips for avoiding some of the pitfalls of not creating a succession plan as part of your estate planning.

Write a Will

You might assume that when you pass away your business will automatically go to your surviving spouse, or children if your spouse is no longer living. Dying without a will (also called dying intestate) means the properties and assets owned by you, in your name, will be subject to probate. This means the court will divide the assets according to a formula set by the state, and not according to what the individual would have wanted, or the needs of the beneficiaries. The court can decide, for example, that the surviving spouse will get 50 percent of the assets and the children will split the remaining 50 percent, whether they are minors or not. Probate also means that your personal business will be made public, and the proceedings can take as long as two years.

Writing a will ensures your wishes are granted after your death, and that your assets are distributed in the way you see fit.

Protect Your Spouse From Creditors

If your spouse is a co-signer on your business loans, he or she is at risk for legal risk in the event of your death if your business has debt. If you’re a sole proprietor, the assets from your estate will be liquidated to pay off the debts of your company, which could leave very little (if anything) for your family. However, with an S Corporation, the deceased person’s estate becomes the owner of the business shares—while this can be great in some instances, if the heirs aren’t qualified to take over the company, this could spell disaster. In the case of an LLC, LP, or LLP, the plan is determined when the company is formed.

When you work with a well-qualified attorney to draft a trust, you’re protecting your heirs from your debts and ensuring that your money will go to its intended purpose. An irrevocable trust further helps protect your assets from creditors, transferring your assets to a trustee with instructions that are specific and direct the trustee on how to use the money.

Create a Succession Plan

When you gift your profitable business to a successor, you’ll protect your business from tax penalties, as long as the business is worth less than $5.23 million over the total lifetime. However, if you pass away or become incapacitated before you set up a succession plan, you won’t be able to gift your business to a successor, and tax penalties will be incurred.

You can also form a partnership to transfer the business to somebody who can buy out the company upon your death, or if you were to become debilitated. Be sure this person actually wants to take over the business. Unfortunately, in some cases, the person chosen to buy out the company in such a partnership isn’t prepared to take over the company, doesn’t want it, or is unable to run it effectively, resulting in the business folding altogether. If you’ve chosen your children to take over the company, you will need to appoint a custodian who can take over the company until the children are ready.

AdvisorRETIRE can help you decide how to handle this aspect of the succession process. Contact us now to get started.

Get a Life Insurance Policy

In addition to your living will and your succession plan, a life insurance policy can ensure your family is taken care of in the event of your death. This is not only a way to ensure that the costs of living are covered, in addition to paying off personal debts, but it can help pay for college for your children, too. The proceeds of the life insurance can also be used for the spouse or children to buy out your share of the business if you have an S-corp or an LP, LLC, or LLP. You will want to ensure that the amount of life insurance coverage you buy will cover the costs your descendants need after you pass away. Work with your agent to determine the amount you need, and be sure to make adjustments throughout your life. Your life insurance needs will change depending on your personal wealth, the number of heirs, and other factors.

advisorRETIRE understands the ins and outs of succession planning, retirement, and planning for the future. Sign up with us today to discuss your situation and to get the ball rolling with your plans for the future.

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AdvisorRETIRE is your source for succession planning services. We partner with you to make your retirement the smoothest it can be, and prepare your company for its new leader. Sign up with us today so we can determine how to make your retirement go off without a hitch.

Here are some ways for you to prepare your children to take over for you once you retire.

Start Early

Don’t leave your succession planning for the last minute. For one, the unexpected could happen, leaving your business and your family in a bind it can’t get out of. But one of the reasons you need to start your succession planning early is so that your family members know what to expect. Announcing your successor at your retirement party is a sure path to disaster. Your clients won’t be prepared, won’t have relationships built, and will feel abandoned. Your family members could feel resentful if they didn’t get the position they wanted, creating conflict. And that leads us to the next item on the list.

Set Expectations for Succession Early

The most common reason most family-run businesses put off succession planning (or avoid doing it altogether) is that the leader of the business doesn’t want to cause strife among the family. However, conflict can be reduced, or at least dealt with early, when expectations are set early regarding the roles family members will play within the company. Put this plan in motion as early as possible, several years before you plan to retire. Address each family member individually to discuss strengths and why you want them to fill a specific role within the company, their goals, and how you will help them get there. While a family member might be disappointed they didn’t get the role they wished for, they will know that you are invested in their future.

The Right Person For The Job

Don’t choose a successor because they’re the oldest child, your male heir, or other demographic markers. Choose a successor because they’re the best person for the role. Be honest with yourself regarding strengths and weaknesses. For example, if Child A has a short temper but is a wiz with numbers, a role in accounting for the company will be more suitable than a supervisory role. If Child B has a great amount of patience, an eye for the big picture, and a great amount of creativity but isn’t good with crunching numbers, a leadership role could be more suitable. Put your children’s strengths to use, and don’t put them in a role they’re not going to thrive in (which will subsequently keep your company from thriving).

Prepare Your Children For Their New Roles

It’s possible that you’re the one who is fulfilling the role of several people in your business, and that you’re working overtime to make things happen. Because you’ve been so intimately involved in the business and know it inside and out, you are the only person who can truly train your child for the role they’re about to step into. However, your children need to have proper certifications, education, and other training to be able to take over these roles as well. Even while they’re in high school you can discuss the possibilities of filling certain roles in your company, and how they could potentially fill those when they’re of the right age.

Be a Good Role Model

Even if you work long hours as a business owner, be sure you spend quality time with your children. When it’s time for your children to take over your business, they might not want to do so if they never saw you growing up because you worked 60+ hours every week, did business over vacations, and were on your phone the few hours they did see you every day. Establishing a work-life balance sets a good standard for your children, showing them that while you do work long hours, the time you’re at home is theirs. If stepping into your shoes isn’t appealing to them, they’re going to be hesitant to do so or decide to not do it at all.

Don’t Force the Issue

Your kids might not want to take over your company at all, and this could be a huge disappointment to you. Some parents force the issue and put their children in a tough spot. When your kids have no interest in taking over, their lack of enthusiasm is going to ensure a recipe for disaster. While some might get into the role and decide they actually like it, that’s very rare. Don’t push them into accounting if their passion is healthcare. Their skill set could be all wrong, but more importantly, they will likely resent you for not allowing them to pursue their own path. Your business is likely to fail. In this case, you should consider leaving shares of the company to your children, but allow another person to step into your role.

AdvisorRETIRE is your source for succession planning. Our experts will work with you to determine a succession plan, work toward your goals for retirement, and ensure you have the right paperwork and know-how to make your retirement a success. Sign up with us today to make sure you’re ready for the future.

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Succession planning is a rather large undertaking, and getting started can be overwhelming. You might not know where or how to start, and that could stop you from getting started in the first place. Breaking down some of the most-asked questions about succession planning can get the ball rolling, so here at advisorRETIRE, we’ve put together some of the questions we’re asked often.

advisorRETIRE is the leading source for financial advisors when it’s time to execute a retirement plan. We have a proven record and will partner with you to make your retirement go as smoothly as possible. Contact us today to let us know how we can work for you.

When Do I Start Forming My Succession Plan?

Right now. It doesn’t matter where you’re at in your career when you start your succession plan. Whether you’re fairly fresh out of the gate, in the middle of your career, or nearing retirement age, knowing your plan for succession is crucial. You might have family members poised to take over, an existing employee you want to groom to take over or want to hire new talent altogether. No matter the plan, establishing goals as early on as possible and working toward them, and reevaluating them on a regular basis, will ensure you’re able to retire when you want to retire. Read this article for more: What to Consider Before Creating Your Succession Plan.

Why Do I Need Succession Planning?

You’ve spent years creating your business. You’ve invested countless hours, money, training, and energy building your company to what it is (or what it will eventually become). If you have employees or people who rely on the income from your business, you’ll likely be stunned to hear that 99 percent of independent financial services and advisory practices will fold once the founder retires. Your clients will be left without an advisor they can trust, and will have to start over building relationships. Bringing in a successor, somebody you can train to run your business after your retirement, is the best way to ensure your legacy not only lives on, but that your employees, those who rely on the income from your business, and your clients are taken care of. Read this article for more: Why You Should Have a Succession Plan.

What Do I Do Once My Plan Is In Place?

Keep working toward your goals, keep working with your clients as usual, and keep building your client roster. While you might assume that your business will see a decline toward retirement, this doesn’t have to be the case if you put in the same effort toward retirement as you did in the prime of your career. People have come to trust you over the years, but as you near retirement, you need to shift the focus to your brand more than you as an individual. Make your successor or buyer a presence, and assure your clients’ everything will be business as usual. Slowly step back once your successor(s) is in place, but not before then. Read this article for more: How to Continue Building Your Business Before You Retire.

How Do I Transition My Clients Before Retirement?

Unless something major has happened and you have to leave suddenly, don’t rush your transition. Allow your clients an adjustment period, which ideally will take at least a few years. During this time, your successor will learn to handle your clients, get to know them, and handle accounts under your advisory. Be sure to communicate your transition to your clients during this period to assure them they’re still in excellent hands, and invite them to visit your new advisor face to face. Keep your focus on the clients to ensure they remain happy as you transition to retirement. Read this article for more: Tips for Transitioning Your Clients Before Your Retirement.

What are the Downfalls of Selling My Company?

This isn’t just a question of what you want to do because sometimes bigger forces are at play. Laws on the federal, state and local levels can dictate your ability to sell your financial advisory firm. Further, the SEC requires the filing of documents, which could impact your ability to sell. When you’re confident that you are legally able to sell your company, you can then work on the sale process, which isn’t for the faint of heart. It requires a significant amount of time and expertise to sell a company, which can create turmoil within your company and with your clients. It’s an emotional process as well, as you watch something you’ve built from scratch being turned over to somebody else. Read this article for more: Why Selling Your Own Firm Isn’t as Easy as You Think.

How Do I Know I’m Ready For Retirement?

Knowing if you’re ready to retire in the first place is one of the biggest steps in succession planning. You’re making one of the biggest decisions of your life, and as you know, a lot is at stake. One of the biggest considerations you have to make is regarding your employees, and whether they will feel secure in the company after you leave. Your clients need to feel confident that their finances will be handled with excellence after you leave, and your company needs to be able to run without you. If all of these are in order, next ask yourself if you feel confident with your company’s ability to continue when you leave. When you can answer confidently that these areas will be covered in your absence, you are in a good place. Read this article for more: Ready for Retirement? Our Financial Advisor Retirement Quiz Will Tell You.

When it’s time to start succession planning, advisorRETIRE is your partner throughout the entire process. Sign up with us today.

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Get Out of Your Comfort Zone

As we said, retirement is a major life transition. During major transitions in our lives, it is time to reflect on what is truly important to us, and what you want to leave behind. This means that it is more important than ever to consider how you spend your time. This is a great time to do something you haven’t done before. Why not skydive? Go on that exotic vacation you were always curious about? Try a pottery class? Do something to put yourself outside of your comfort zone before you retire so you can start to look forward to filling your free time with new pursuits.

Protect Your Belongings

As a financial advisor, you have been very protective of your assets, but have you thought about things that hold more sentimental value? As you transition into retirement, it is a good idea to get organized with the meaningful belongings in your home. If you pay no mind to this issue after you are gone, your children are left with a big mess, and the items that have meaning or value may be lost forever in the shuffle. Take this time of transition to be proactive about protecting the belongings you have that mean something to you, whether their value is monetary or sentimental.

Prepare for the Inevitable

No one wants to think about death. But as you enter retirement, you are entering the last phase of your life, and it is important that you do so with both eyes open. At this point in your life, nothing lasts forever, and you may find that your spouse passes on before you. It is best to be prepared for this rather than waiting for a tragedy to strike and then deal with the fallout. Talk to your spouse and trusted advisors about it, prepare both emotionally and financially, and you will have an easier time knowing that you are on the same page with your spouse.

Get Serious About Estate Planning

It is important to review your estate plan when anything major changes in your life, including when you retire. When you are getting ready to retire, meet with your estate planning attorney to go over your will and make sure that it is up to date. This way, you will have a good idea about taxes and what you will be paying come retirement, and you don’t have to worry about your heirs in the event of your passing.

Get Healthy

It is estimated that retirees spend an average of 220,000 dollars on medical expenses. Now is the time to offset those costs as much as you can by prioritizing your health. If you have been eating poorly and living a sedentary lifestyle, you are just asking for those crazy medical bills. Now is the time to start fresh. Eat a balanced diet of whole, unprocessed foods, and start exercising regularly. You might try a new fitness class at your gym or take up an old hobby like biking or dancing to make sure that you are moving.

Stay Connected

When you are working, it is much easier to stay connected to the outside world. After all, you are heading out there and seeing people every day! Once you are retired, however, it can be easy to become somewhat of a shut-in. As your schedule shifts from the typical 9-to-5 grind to… well, whatever you want it to be, it is important to keep connected to the outside world to avoid feeling depressed. You can offset feeling like a hermit in retirement by starting now. Get connected by joining some local organizations, reconnecting with old friends, and joining social media.

Implement a Succession Plan

Regardless of whether you want to leave your business to a family member or to a separate independent financial advisor, it is imperative that you have a written succession plan in place before you retire. Many advisors find themselves putting off their RIA succession planning for years, delaying their retirement despite being well-prepared for it. If you have been putting off writing a succession plan for whatever reason, it is time to start now. Contact advisorRETIRE and we will help you implement and execute a succession plan that will serve you, your business, and your clients well. Call today!

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Look for Every Resource

When you sit down with your client, you should start by assessing every financial resource they will have in retirement. Every resource should be taken into account, including any:

• Qualified retirement plans (401k, 403b, etc.)
• Pensions
• Annuities
• IRAs
• Investments
• Social Security
• Stock options
• Life insurance (cash value)
• Interest in a business

You may also consider expected inheritance, but it should not be counted on as a guaranteed resource, as relationships can change and more of a relative’s assets may be required for their care at the end of their life.

Assess Their Retirement Budget

After determining all of the financial resources your client will have at their disposal, it is important to assess their retirement budget. In particular, you should look at their expected spending for areas where you could reduce costs without having too great an impact on their lifestyle. There may be a less expensive yet comparable area for them to move to, for example. Alternatively, they could cut the amount they travel down, and they could downsize their home.

Suggest Working Longer

Your client may dream of retiring early at 62, but if their retirement accounts leave a lot to be desired, they may benefit from postponing their retirement for just a couple more years. With every year they defer retirement, their investments have more time for gains. Additionally, delaying Social Security till 70 maximizes their benefit and allows any of the changes they make to their spending to have a more different impact on their wealth.

There is also a new concept that has become more popular: phased retirement. This essentially means that the client moves to a more part-time role as they near retirement age. They might work fewer hours or have fewer job responsibilities. This may allow them to stay on employer-sponsored health insurance until Medicare kicks in, and is a way for them to generate more income while still having more free time. Alternatively, they may retire from their full-time job and pursue a second career, whether it is starting their own business or working part-time in a field they could not afford to work in before.

Acquire More Risk

Obviously, this strategy should be approached with caution. A client in their 50s should not be investing in high-risk stocks like a 30-year-old can. However, it is a good idea to assess your client’s portfolio at this point to see if the risk/reward tradeoff matches their goals, risk tolerance, and timeline. If they are underinvested, it may be time to adjust their portfolio, though of course, this needs to be done selectively and over time.

Advocate for Downsizing

Downsizing is not only a great way to free up cash for your client’s retirement, it is also a natural step on the road to retirement. As the kids grow up, move out, and start working, needs change. Maybe your client still lives in the five bedroom house in which they raised their children, and now it is just them and their spouse. This is a good time for them to downsize because they cannot justify the cost of maintaining such a large home for only two people. A condo or a small house may be more appropriate for them at this point in their life, and the profit from selling their home could have a lasting impact on their retirement. This is also a good time in life to assess whether that big minivan or SUV is still serving them, or if downsizing to a more fuel-efficient model makes sense.

Start Early

The earlier you plan for retirement, the better. Many people are focused on the saving aspect of planning for retirement, and that is certainly very important. However, having a plan for retirement is also a crucial part of retiring on time and comfortably. Ideally, you will be able to help your client by the time they are in their early 50s. This gives you a decade to discuss with them their current situation, what they can do to start saving more now and help make any adjustments that may have an impact on their retirement. Make sure that all of your clients in this age range are as prepared for retirement as possible by having the tough conversation with them now rather than later.

When you are preparing for retirement, as a financial advisor, it is essential that you have a succession plan in place. This will ensure an easy transition for you, your business, and your clients, and take one source of stress from retirement off of your plate. When you retire, it is your moment to relax and enjoy your freedom. By implementing a succession plan now, you can rest assured that you are not leaving your financial planning firm in the lurch. Contact us today to learn more about the succession planning process.

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Assess Your Precise Needs

Right now, your budget may fit perfectly with your current needs. However, when it comes to budgeting for retirement, your needs will change, and it is important to have a clear picture of what they will look like. People often retire too early because they use their current budget to overestimate how long their nest egg will last them. Calculating a working cash flow analysis can help you figure out your requirements to maintain your standard of living in relation to what your retirement income will be. Delaying your retirement may be frustrating, but it is ultimately the best way to ensure that you will be comfortable for your retirement years.

Downsize

If, after this analysis, you see that your potential income will not meet your retirement needs, you may consider downsizing your assets. Maybe your home is bigger than you actually need, and you can downsize to a smaller home (and smaller mortgage payments), or you could look into a reverse mortgage. After you retire, it won’t make sense for you and your spouse to both have your own cars. Alternatively, moving to a place with a lower cost of living can help your retirement savings stretch further. You might be hesitant to downsize, but trading in your current lifestyle is worth it to ease the financial stress.

Take a Look at Your Retirement Accounts

It is important to consider your retirement accounts when assessing how prepared you are for your retirement budget. First, understand how taxes affect your retirement savings distribution. If you have a 401k or traditional IRA, for example, income tax comes into play. Alternatively, if you have a Roth IRA, you can withdraw from it without being taxed. You can maximize the effects of your non-taxable accounts by withdrawing from your taxable accounts first. If you still have a few years before retirement and are more than 50, you may consider taking advantage of the catch-up contributions on your 401k, as the contribution limit is raised by 5,500 dollars after 50. You may also consider working part-time during retirement. You can reduce your need to withdraw from your retirement accounts if you have a working income, allowing you to have much greater financial stability once you are in your 80s. Make sure you understand the workings of your taxable retirement accounts, as early withdrawals and some types of rollovers can result in hefty penalties.

Rebalance Your Portfolio

As you reach retirement age, it is time to rebalance your portfolio to meet your needs. When you were younger, you could invest in risky stocks because you had time to recover any potential losses. Now, it is time for lower risk and more conservative investments. You may choose to move your money into bonds, though this safe strategy can result in lower profits than you need for future medical bills. Alternatively, you can move money into annuities or CDs instead, which will provide reliable income. When looking to rebalance your portfolio, think less about individual stocks; instead, focus on your overall allocation of assets. Should you end up taking a loss, try applying it against your taxable savings to lower future taxes on your gains. Increasing risk may be nerve-wracking at this point, but it could be essential for funding the next 20, 25, 30, or more years of your life.

Change Your Lifestyle

You can also stretch out your retirement income by making certain small lifestyle changes that can add up to big savings. First, prioritize your health. It is estimated that retirees will have an average of 220,000 dollars in medical bills. You can cut down your risk of high health costs by caring for your health now. If you eat a balanced diet, don’t smoke or chew tobacco, and exercise regularly, your chances of accruing large medical bills are significantly lower. Additionally, once you are retired, you have way more time to look for opportunities to save. You can start to clip coupons, travel off-season, and research discounts to save money on your expenses. You might also consider trading your car in for a more gas-efficient model to lower your fuel costs. Also, now that you are in the right age range, you can join AARP for discounts on a variety of purchases. Take advantage of your free time to research ways to cut costs and to create a detailed retirement budget.

If you are a financial advisor planning to retire soon, it is imperative that you have a succession plan in place. However, many advisors end up putting this process off, significantly delaying their retirement. You don’t have to procrastinate; you can utilize our skills and experience to put into place a successful succession plan. If you need help with RIA succession planning, contact advisorRETIRE here today.

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As a financial advisor, there are also other things to keep in mind when it comes to estate planning, both for yourself and for your clients. Estate planning isn’t a one-time activity; your estate plan should be periodically updated throughout your life as circumstances change. Here are some considerations that you should make, both when planning your own estate and when working with your clients.

Mistakes to Avoid

When reviewing an estate plan, avoid these mistakes:

• Failing to check the beneficiary designations on retirement plans, life insurance policies, and annuities. The beneficiary designations for each of these will overrides anything in the will to the contrary.
• Not leaving important written documentation of all assets and accounts, including usernames and passwords and where to locate estate planning information.
• Failing to update the estate plan over time. Estate plans need to be updated periodically to reflect changes in life circumstances.
• Failing to retitle assets to a trust after establishment.

Here are some points in a person’s life when they should re-evaluate their estate plan.

A New Baby

Whether a new baby is born into your family or is adopted, it is important for parents to promptly put a will in place. It doesn’t matter if you verbally ask someone to be the guardian of your child; this does not necessarily mean your wishes will be respected if you pass away. A written will is important to make sure that your children are taken care of in the event of your death.

Marital Status Change

When you get married, there are a lot of things that need to be changed, including beneficiary designations on your retirement accounts and life insurance. You may also need to change the title of your home to reflect joint ownership. Finally, your will should also be updated to reflect whatever assets you wish to leave behind to your spouse should you pass away.

When you get divorced, you may need to alter your estate planning documents if you updated them after your marriage. You may change any beneficiary designations from your former spouse to another person, such as your children or a different relative.

Financial Status Change

Over time, perhaps you have been successful in your career and have started to accrue more wealth, or maybe you have received an inheritance or invested wisely. Regardless, an increase in wealth is a good moment to revisit the estate plan, as it may be more complicated.

On the other hand, a loss of wealth may require revisiting the estate plan to simplify things.

Beneficiary Status Change

It is possible that after you have set up your estate plan, the life circumstances of one of your beneficiaries has changed. For example, if you intended to distribute your assets evenly among your children, but one has become independently wealthy, they may prefer that the other siblings receive the assets as they have greater need. Other circumstances may be that a beneficiary has decided they are uncomfortable receiving one lump sum of money; in this case, you can work out a different arrangement that will benefit them while helping them save. Finally, if a beneficiary has passed away, the estate plan must also be updated.

Selling or Buying a Business

In the event of buying a new business, it is important to update the estate plan to include provisions that allow heirs to benefit from the value of the business. A buy/sell arrangement, funded by insurance, may be one way to accomplish this. This basically provides value to heirs without taking away from remaining partners of the business. The specifics of this arrangement will vary according to the specific circumstances.

In the event of selling a business, it may be that you have reached a new level of wealth that requires alterations to the estate plan.

We have ideas about what we would like to happen to our assets in the event of our deaths, but many people are not proactive about putting an estate plan in place. However, estate planning is the only way to ensure that your wealth and possessions are left to their rightful owner. Whether you need to compose an estate plan yourself or you need to inform your clients of this important financial issue, keep in mind estate planning during these critical times in a person’s life.

When you need a financial advisor succession plan, you need guidance from an experienced source. At advisorRETIRE, we have helped countless financial advisors put succession plans into place to help them transition into retirement. Implementing a succession plan might seem overwhelming right now, but we can help you through the process to ensure that your business is left in good hands when you are ready to move on. Contact us today to learn more about what we can do for you with our financial advisor succession plans.

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Claiming Too Early

There are not very many circumstances in which it makes sense to claim your Social Security Benefits before your full retirement age (which is determined by the year of your birth). If, unfortunately, you are in poor health and have reason to believe that you will not live as long as your peer’s life expectancy, then you may want to claim benefits early in order to have more money during the time you have left. Additionally, if you are in desperate need of money, it makes sense to claim your Social Security benefits right when you can at age 62; if claiming it is the difference between buying food and starving, you should absolutely claim Social Security.

However, beyond these extreme circumstances, it is best to leave your benefits alone as long as possible. This is because if you take them early, you are seeing a 30 percent drop in your benefits. Every year you wait between age 62 and 70 to start collecting Social Security, your benefits rise by 8 percent. If you can afford to wait until age 70 to collect Social Security, you could get far higher monthly benefits.

Additionally, when you take your Social Security benefits early while you are still working, you face repercussions. If you do this, your benefits are reduced by one dollar for every two dollars you earn over 15,720 dollars. This deduction is not taken little by little; it is taken upfront. So instead of it reducing the overall amount of benefits you get in a year and distributing it month by month, you will go months (depending on how much is deducted) without a Social Security payment before you start getting your benefits. This is why you should seriously consider not claiming your benefits too early.

Aiming for the Wrong Retirement Age

Make sure that you know what your full retirement age is before making any plans. You can find a chart here that outlines the different full retirement ages according to the year you were born. However, even this chart may be inaccurate by the time you wish to retire. Now that more and more people are living longer and longer, there is a talk of raising the full retirement age, as the Social Security Trust Fund is quickly being depleted and the program has some serious issues. Keep an eye out to make sure that you are accurately planning your retirement with the right age in mind to ensure that you do not cause yourself financial hardship in the future.

Don’t Rely on Social Security as Your Only Income

Social Security simply should not be your only source of retirement income, as should be obvious by the issues outlined above. Particularly for younger people reading this, it is possible that Social Security will no longer be a program by the time you retire. Therefore, it is imperative to diversify your retirement income to ensure that you can survive on your earnings. It is a good idea to just pretend that Social Security doesn’t exist when you are making your retirement plan. Try alternative methods for saving money. One of the best things you can do is put money into a Roth IRA, 401K, or IRA. Additionally, you may try buying properties and renting them out for an additional monthly income that can help you through retirement. You could also consider starting a business that would be self-sustaining after you retire. Regardless of how you do it, it is imperative to save for retirement without consideration of Social Security.

At advisorRETIRE, we are aware that a lot goes into retirement planning, and coming up with a succession plan for your financial advisor business may be low on your list of priorities as you keep putting it off. However, a succession plan is essential to protect yourself, your assets, and your clients, and it is better to implement one now than wait and be forced to delay your retirement. If you need assistance with the succession planning process, we can help. We are experts in succession planning and can help you design, implement, and execute a plan that will benefit you and your business. Contact us today to learn more!

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Peri-Retirement (age 50 to 62)

Before you retire, you are in the peri-retirement stage. While you are still working, you are starting to be able to see retirement in your near future. This means you have a much better idea of what kind of savings you have, as well as what your expenses will be in retirement. You can finally start to figure out what exactly you want to do with your upcoming abundance of free time. What has been hypothetical since you started working in your youth is now quickly becoming a reality.

During the peri-retirement phase, it is important to assess what your income and expenses will be at retirement age. Find out what you will receive from your pension or from Social Security. Look at the balance of any of your retirement savings accounts, such as IRAs or 401ks, and determine how much you will be able to withdraw each month. Consider your mortgage; will it be paid off by then? If you will have to continue making mortgage payments, determine for how long and for how much.

At this point, you will assess whether or not you will be able to retire early. Sometimes, an early retirement buyout is offered to you or you may be forced to accept an offer. This is also a very good time to write a succession plan for your business. If you are a financial advisor and need help with RIA succession planning, contact us at advisorRETIRE. We have extensive experience helping financial advisors implement and execute succession plans for the benefit of themselves, their families, and their clients.

This is also a good time to start evaluating your budget and cut back on any wasteful spending to prepare for your retirement. You still may have major expenses to deal with in retirement; for example, if you are still putting your children through college or if you plan on buying a new home. Therefore, having your budget in order now will help your retirement budget go farther.

Early Retirement (ages 62 to 70)

When you first retire, this is when your budget will change the most. Without having a steady paycheck (unless you have a pension), you will need to manage your own income. You will also have to decide when you want to begin collecting your Social Security benefits. Additionally, if you were on an employer health insurance, you will have to find your own health plan, and consider the needs of your spouse and dependents as well. If you are old enough to qualify, you will want to sign up for Medicare.

Additionally, if you do not have long-term care insurance, it is a good idea to invest now. Though it can be expensive, it can also save you a lot of money in the event that you need to enter a nursing home or some other kind of extended care.

During this early stage in retirement, you have a lot of free time and a big budget, which means that you could be tempted to go blow a big chunk of it on something exciting. Maybe you are longing for that boat you always wanted, or you are ready to finally go on that trip to Greece you have been talking about for years. You might think that this is the perfect time to buy that vacation home you have been eyeing. However, this is not the time to blow through all your savings. Remember that this money needs to last you for decades to come, so be cautious about your spending when you first retire.

You may consider taking a part-time job, starting a business, or trying a new career in early retirement. Maybe a certain career field has always appealed to you, but you couldn’t afford to raise your family on what it pays. In retirement, you have the time and resources to pursue a new career, regardless of what it pays. Additionally, remember to balance your entertainment between more expensive and inexpensive/free hobbies; try volunteering for local organizations for a sense of satisfaction without a high price tag.

Additionally, you may consider relocating after you are retired. Now that you do not have a career tying you to one place, you might think about flying the coop. You will want to consider how this will look with your retirement budget, as moving comes with costs. Additionally, if you move somewhere with a higher cost of living, it could end up being detrimental to your budget. Consider these factors when deciding whether or not to relocate.

Middle Retirement (ages 70 to 80)

Come middle retirement, you will be receiving Social Security, as the longest you can defer it is age 70. By 70 and a half, you will also have to start taking from certain types of retirement accounts if you have them, such as 401ks, 457bs, or Roth IRAs. This is a good time to go over your asset allocation.

As well as the additional income you can expect to receive, you may be bored or no longer able to do some of the activities you participated in when you were freshly retired, such as traveling. This will probably lower your budget as you may wish to spend more time at home or you may be more focused on spending time with grandchildren. Additionally, it is likely that your children no longer need your financial help anymore, and you may no longer need to pay for term life insurance if you are, as these policies generally expire at age 65. This means at this stage of retirement, if the proper planning, you are probably in a good financial position.

This is a good time to look over your will or estate plan, as it may have been many years since the last time you updated it. While you are still in a good mental state, it is important to make sure all of your affairs are in order should you pass away. Give someone you trust the financial power of attorney that kicks in once you are not able to manage money and healthcare power of attorney in the event that you need someone to make medical decisions for you.

Late Retirement (age 80 and beyond)

After age 80, you are in the late stage of retirement. You may have higher health care costs now due to a chronic condition and it is typical for spending on medical needs to increase during the late stages of life. While Medicare covers some health care expenses, you will likely have co-payments, deductibles, and prescriptions that are out-of-pocket. If you move to an assisted-living facility, you may have other new expenses.

At this point, you will want to see how much money you have left and assess whether or not you need to change the rate at which you are withdrawing money. If you need more money, a reverse mortgage may be a good strategy for increasing your funds. Compare how much money you have, how much you will need, and how much you plan on leaving behind for your loved ones.

While retirement requires careful planning and budgeting, if you are properly prepared during each of the stages, you can take advantage of your newfound freedom. If you are a financial advisor who wants to retire but doesn’t have a budget, you need our RIA succession planning services. Contact advisorRETIRE for our financial advisor succession plans today.

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Pros

Early retirement may be good for your health.

There is conflicting research on this topic. While some studies show that early retirement is good for your mental health, others have found the opposite. However, when you consider it for yourself, you can understand why some people would argue that it is better for your health. Most obviously, when you retire, you are no longer under work-related stress. This could have a powerfully positive impact on both your mental and physical health. Additionally, with more time on your hands, you may be able to dedicate more time to exercise and healthy eating, which could help you become healthier. With the time and lack of stress retirement affords, it could be healthier for you to retire early.

You will have time to travel and pursue hobbies.

One of the aspects of retirement that appeals most to people is the ability to travel. Once you are retired, you are not limited by how much time you can take off of work. You have the freedom to travel where you want, whenever you want. Because you are not limited as to when you can travel, you can take advantage of the less busy and less expensive off-seasons of a variety of destinations. This is particularly advantageous when you retire early because you are not limited by any physical ailments that can impede your travels. With your mobility unencumbered and time at your disposal, retirement is the perfect time of life to travel, whether it is across the country or around the world.

You could start a new career.

If you have ever wondered how you would have done had you chosen a different career path, early retirement allows you the opportunity to try something completely new. When you retire on-time or late, it is unlikely that you will be an appealing candidate for many businesses because you don’t have that much time to dedicate to your new job. However, when you retire early, you still have years left to give to a new career. Even if you wanted to start your own business, if you were to do it at age 60, you could still have a rich and stimulating new career for 20 years or more.

Cons

Early retirement may be bad for your health.

On the flip side, there is some research to suggest that early retirement is not good for your health. The National Bureau of Economic Research performed an analysis in 2008 that indicated that retirement is associated with a decline in mobility and mental health, and an increase in poor health conditions like heart disease. However, this report also found that retirees who were active and social during their retirement were less likely to suffer this ill-effects. Additionally, it could be argued that these negative effects are simply inevitable with age, so retirement is not necessarily causing these issues, so much as retirement happens to occur as people are getting older and starting to have these health problems.

Your social security benefits will be lower.

The sooner you take your social security, the lower the benefits. For example, if you were born in 1960 and you retired at age 62, the earliest you can start taking social security benefits, they will be 30 percent less than they would have been if you had waited until age 67, the age Social Security considers your full retirement age. For each year from 67 to 70 that you postpone your retirement, you receive eight percent more monthly benefits. There are no additional benefits for retiring after 70, however.

You will have to stretch your retirement savings.

If you retire early, your IRA and other savings will have to last you a lot longer than it would if you had retired on time or late. For example, if you retire at age 60 and live to age 90, your savings have to last you 30 years. In contrast, if you retire at 70, your savings only needs to last for 20 years and you will have had more time to accumulate more savings because you will have contributed more and it will have more time to compound. If you want your retirement to be more comfortable, it makes more sense to retire later rather than earlier.

Now that you know the pros and cons of retiring early, you can determine for yourself what the best course of action is for your particular needs. Regardless of whether or not you plan to retire early, it is important to have a succession plan in place if you are a financial advisor. If you are an independent financial advisor who is planning for retirement, it is imperative that you have a succession plan in place. You may feel intimidated by this process, but don’t fear. Financial advisor succession plans are our specialty at advisorRETIRE! Don’t put off this important task any longer; count on us to help you create and execute a successful succession plan. Contact us today!

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