A Complete Guide to Retirement Planning in Southern California

California is an ideal destination for retirees, with its mild climate, vibrant communities, and rich cultural offerings. Today's retirees see this phase of life as a new beginning, full of opportunities for growth, exploration, and purpose. While pursuing passions and exploring new possibilities is exciting, financial freedom makes it all possible.

Surprisingly, many approaching or already in retirement lack a clear financial plan or haven't updated it in years. Just as you wouldn't build a house without a well-thought-out design, retirement requires a carefully crafted, adaptable financial plan to support your vision.

Key elements of a complete financial plan include:

• Set goals and aspirations: Define your retirement vision, lifestyle, activities, and priorities. Estimate the costs associated with these goals to create a realistic budget.
• Gather financial data and information: Review retirement income sources like Social Security, pensions, and savings. Assess your current assets, liabilities, and savings to understand your financial standing.
• Develop a comprehensive plan: Focus on areas like investment strategy, tax planning, retirement accounts, estate planning, and healthcare. Build a plan that maximizes your assets and incorporates tax efficiency.
• Put the plan into action: Implement recommendations, adjust accounts and savings, establish income streams, and make any legal updates. Work with legal and financial professionals as needed to carry out each aspect of the plan.

Bulman's financial advisors in California can create a tailored plan for your needs, whether you’re looking for retirement planning in Northern or Southern California.

Effective planning must account for life's roadblocks and unforeseen complications to maintain stability despite uncertainties. Uncertainty can come in geopolitical shifts, economic downturns, natural disasters, or personal challenges. These events can affect your savings, and market volatility may feel especially worrisome when you see your investments fluctuate.

Life's challenges and volatile markets are inevitable, so being prepared with a solid investment strategy can help you manage financial ups and downs while maintaining confidence in your retirement plan.

Fundamental investment strategies include:

• Understand your risk tolerance: Knowing your comfort level with risk helps shape your investment approach. A risk-averse retiree may lean toward stable, income-generating investments, while those with a higher tolerance might opt for growth opportunities.
• Diversify your portfolio: Diversification is a crucial strategy for managing volatility. By spreading investments across different asset classes—such as stocks, bonds, and cash—you can reduce the impact of a downturn in any one area.
• Allocate assets wisely: Asset allocation means dividing your investments among different types and styles. For instance, a conservative investor might put 75% into bonds and cash and 25% into stocks across various sectors. This approach balances potential returns with manageable risk, helping protect a portfolio from extreme market conditions.
• Review your portfolio regularly: As market conditions shift and your goals evolve, periodic portfolio reviews help keep your investment strategy focused on meeting your retirement needs.

Bulman's team can help you build a robust, diversified investment portfolio that matches your risk tolerance and adapts to changing circumstances.

A sustainable retirement income is the foundation of an enjoyable retirement. It usually involves a mix of income sources to create a steady stream that supports your lifestyle. Here are strategies for building a tax-efficient income plan.

Maximize Tax-Advantaged Accounts

If you're still working, take full advantage of employer-sponsored plans like 401(k)s, which allow you to save with pre-tax dollars that grow tax-deferred. SEP IRAs and Solo 401(k)s provide significant tax benefits for self-employed individuals.

People over 50 can make catch-up contributions, with extra allowances specifically available for those aged 60 to 63.

Roth IRAs offer tax-free withdrawals in retirement, making them beneficial if you expect to be in a higher tax bracket later. Consider Roth conversions to switch traditional retirement savings to a Roth IRA gradually.

Evaluate Core Income Sources

As retirement approaches, evaluate your core income sources like pensions, Social Security, and retirement savings accounts.

Timing your Social Security benefits is crucial, as you only get one chance to decide. Factors like health, income needs, and your spouse's benefits are worth considering. Delaying Social Security until age 70 can lead to higher monthly payments, maximizing your lifetime income.

Tax-Efficient Withdrawal Strategies

Most retirees withdraw from accounts like IRAs or 401(k)s to supplement their income. These accounts are great for retirement savings, but strategic withdrawals can significantly minimize taxes and preserve wealth.

Prioritizing withdrawals: For tax efficiency, it's often best to use taxable accounts first, preserving tax-deferred accounts for later to allow continued tax-deferred growth.

Asset placement: The type of accounts you use for your investments—taxable, tax-deferred, and tax-free—can impact tax efficiency. Growth-oriented investments like stocks might be better in taxable accounts, where qualified dividends and long-term capital gains have lower tax rates. Income-generating investments, such as bonds or REITs, are often placed in tax-deferred accounts to avoid higher taxes on interest income.

Tax-loss harvesting: This involves selling investments at a loss to offset taxable gains in your portfolio. If losses exceed gains, up to $3,000 can be used annually to offset ordinary income, with additional losses carried forward to future years.

Planning for Required Minimum Distributions (RMDs)

Once you reach age 73, RMDs are required from traditional retirement accounts and are taxed as income. Planning RMDs helps manage taxable income and supports your estate plan.

Bulman advisors can help you explore retirement tax benefits in California, aligning your income with your lifestyle goals for retirement.

Retirement planning for women comes with unique challenges that call for thoughtful strategies. With women often outliving men, planning for longevity becomes essential to ensure savings stretch over time. Career breaks for caregiving can affect retirement savings, Social Security benefits, and financial security, making a comprehensive retirement plan even more important.

Planning for Healthcare and Long-Term Care

In California, healthcare costs are among the highest in the nation. Medicare and Medigap insurance cover many medical expenses but usually don't include long-term care like nursing facilities or home healthcare. Medi-Cal may help, but only after most assets are depleted.

Long-term care insurance can aim to protect assets and provide access to quality care. Hybrid policies that combine life insurance with long-term care benefits offer additional flexibility, allowing you to use a portion of the policy's value if nursing care becomes necessary. Planning ahead can address these potential costs without compromising your financial independence.

Smart Investing for Women

More women are taking control of their investments, and it's wise to make sure your portfolio matches your risk tolerance. You can also focus on areas that matter to you, such as ESG (Environmental, Social, and Governance) or ethical investment opportunities. Stay engaged and regularly review your portfolio to keep your strategy on track.

Seeking Professional Guidance

Most individuals benefit from working with an experienced and trusted financial advisor, especially when navigating complex issues like longevity and long-term care planning in California. Before selecting an advisor, ask them:

• What is your experience?
• What services do you offer?
• How often will we communicate?
• How are you compensated?

Look for fiduciary advisors legally required to act in your best interest. Be cautious of advisors who work on commission, as this may influence their recommendations.

At Bulman Wealth, we assist women in building retirement plans tailored to their unique needs, from long-term care planning in California to investment strategies. With personalized guidance, we can help you feel more secure about your financial future.

Estate planning is vital to retirement planning in Southern California, especially given the state's complex probate process, which can be costly and time-consuming. A well-crafted estate plan ensures your assets are distributed according to your wishes and helps your loved ones avoid unnecessary legal fees and delays.

Key elements of estate planning:

• Trusts: Revocable living trusts let you control your assets while alive and simplify transferring them after death. Trusts help heirs avoid probate, making the process private and efficient.
• Transfer-on-Death: A TOD designation allows bank and brokerage accounts to be transferred directly to your beneficiaries without going through probate.
• Beneficiary designations: It's important to update beneficiary designations on retirement accounts, insurance policies, and other financial tools. Make sure you've named both primary and contingent beneficiaries to match your current wishes.

Legacy Building Through Charitable Giving

There are strategies to help you build a legacy through charitable giving, leaving a meaningful impact, and potentially gaining tax benefits. Options include:

• Donor-Advised Funds: DAFs enable you to contribute assets for charitable giving over time while receiving an immediate tax deduction.
• Charitable Remainder Trusts: These trusts provide an income stream during your lifetime, with the remaining assets going to charity, offering both philanthropic impact and tax benefits.
• Qualified Charitable Distributions (QCDs): Retirees taking Required Minimum Distributions (RMDs) can direct a portion to qualified charities, reducing taxable income while supporting a cause.

Bulman's financial advisors in California can assess these estate planning and legacy-building strategies to determine if they're right for you.

Building financial confidence in your California retirement requires setting realistic goals and regularly reviewing your progress. Retirement is not a static phase—your personal objectives, income needs, and tax situations can evolve, making it essential to revisit your plan annually to stay on track.

Start by Reviewing Last Year's Goals

An excellent first step is to assess your previous year's goals. Did you meet your targets? Were there gaps or unexpected expenses? By understanding what worked and what didn't, you can refine your approach and set new, more tailored goals for the year ahead.

Set New Financial Goals

Goals provide direction and motivation for managing your retirement assets. For example, you might aim to maintain a specific income level, plan a dream trip, or support a grandchild's education. These priorities help you allocate resources effectively while staying aligned with your long-term vision.

Adapt to Major Life Changes

Life can throw us curve balls in the way of a new marriage, divorce, the birth of a child or grandchildren, the loss of a loved one, or unexpected health problems. These significant life events will impact your financial plan. Regular reviews allow you to proactively adjust and address these changes, helping you maintain confidence despite challenges.

Working with a Bulman financial advisor simplifies this process, providing insights and actionable recommendations so you build greater financial confidence in your retirement.