A Financial Roadmap to Retirement Planning in Roseville

Retirement income planning can be tricky, especially for Californians facing higher living costs. But with the right plan, you may set yourself up for a comfortable, secure future. Following are a few tips to get you and your spouse started.

1. Consider all of your retirement income sources. Social Security is a given for most, but it won’t cover everything. Guaranteed pensions, if you’re lucky enough to have one, can be a major plus. For the rest of us, you’ll likely rely on personal savings, 401(k)s, IRAs, and other accounts.
2. Next, consider your expenses. California isn’t cheap, so be realistic about what you’ll need. Housing, healthcare, utilities, transportation, food, entertainment, and other daily living expenses can add up to a relatively large number.
3. It’s also wise to think about when you’ll retire. Working a few extra years can significantly impact your savings and Social Security benefits.
4. Finally, it helps to talk to a Roseville financial planner, like Bulman Wealth Group. They can provide personalized advice tailored to your family’s situation, aiming to help you optimize your retirement lifestyle and financial security later in life.

Several financial aspects of life will change once you retire. One of the most significant changes is going from a net saver to a net spender. What do we mean by this?

Once you retire, you may no longer be contributing money to your retirement accounts. Instead, you will begin taking withdrawals to cover your cost of living. This can be unnerving for people who have been net savers most of their lives.

Along with this pivot, your investment strategies should be reevaluated and shifted from growth to preservation mode. Think of it this way: You’ve spent years building your nest egg, and now it’s time to protect its value and make it work for you. 

Following are some important retirement investment strategies you should consider:

• While you might have been more aggressive with your investments in your younger years, it’s time to take a more balanced approach. Consider a diversified mix of stocks, bonds, real estate, cash, and other types of assets. Let diversification be your friend.

• Consider investing in dividend-paying, blue-chip stocks. These may provide a steady income stream, particularly useful when you’re not working. Look for companies with a history of reliable dividend growth.

• Don’t overlook bonds. They’re less volatile than stocks and can provide scheduled interest income. Consider a laddered bond portfolio, which spreads out the maturity dates of your bonds. This way, you have bonds maturing at different times, providing you with a more consistent income and assets that can be reinvested.

• Think about annuities. They can offer a guaranteed income for life, which can be comforting. There are different types of annuities, so it’s worth exploring which type might be the best fit for your situation.

• Understand the fees you are paying for wealth management services. High fees will impact your net returns, so be mindful of what you’re paying for your planning and investment services. Low-cost index funds and ETFs may be a great way to be diversified for a lower overall expense.

• Finally, consider working with a financial planner who focuses on California retirement planning. They can help tailor an investment strategy that fits your unique needs and goals. Retirement is a new chapter in your life, and with the right plan, your assets may support a fulfilling and secure lifestyle for three decades or more.

Get insights into the Bulman Wealth Group’s retirement planning and wealth management approach.

It is a given that no one wants to pay more taxes than they have to. Taxes are a category of expense that should be minimized. Given that retirement tax planning in California can be complex and tedious, we’ve provided some tips to help you navigate your tax liabilities during your retirement years in California: 

1. Be aware that California taxes most retirement income, including pensions and withdrawals from your 401(k) and IRAs. However, the state does not tax Social Security benefits, a small source of relief. Knowing this can help you plan your withdrawals to minimize your tax burden.
2. Consider the timing of your Required Minimum Distributions (RMDs) with a comprehensive withdrawal plan. Did you know that taking out large sums in a single year can push you into a higher tax bracket? Instead, spread your withdrawals to keep your taxable income as low as possible each year. This strategy may reduce the overall amount of tax you pay.
3. Roth IRAs can be a great tool in retirement tax planning. Contributions to Roth IRAs are made with after-tax dollars. However, qualified withdrawals are tax-free. You can strategize your withdrawals to optimize your tax situation if you have a mix of traditional and Roth IRA accounts.
4. Keep an eye on property taxes, too. California has programs like the Property Tax Postponement program for seniors, which allows you to defer property taxes if you meet specific criteria. This can help manage your cash flow during early, mid, and late retirement years.
5. Lastly, don’t forget about charitable giving. Donations to qualified charities can be deducted from your taxable income, which helps reduce your tax bill and supports causes you care about.

Planning for healthcare costs in retirement is crucial, especially in California, where medical expenses can be quite high. Costs are also accelerating faster than the rate of inflation. When you need these services, they could double or triple their current costs.

Why the big increases? 78 million baby boomers are entering their retirement years. This puts a lot of pressure on available resources. It takes planning to make sure these pressures don’t impact you.

Here are some practical steps to better ensure you have adequate savings and are prepared to deal with any healthcare-related surprises in retirement:

• Understand what Medicare covers and what it doesn’t. Medicare Part A covers hospital stays, while Part B covers doctor visits and outpatient services. However, it doesn’t cover everything. Prescription drugs, dental care, vision, and hearing aids are often out-of-pocket expenses unless you have additional coverages.

• Consider getting a Medigap policy or a Medicare Advantage plan. Medigap can help cover the gaps in traditional Medicare, while Medicare Advantage plans often include extra benefits like prescription drugs, dental, and vision. Shop around and compare plans to find the best fit for your needs and budget.

• Long-term care is another important solution to think about. Many people will need some form of long-term care, whether in-home, assisted living, skilled nursing, or memory care. Long-term care insurance can be a good option to help cover costs that may impact both spouses and last for years. Buying this type of insurance while still relatively young can get you better rates.

• Health Savings Accounts (HSAs) are also worth considering if you’re still working. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free. Even in retirement, you can use these funds to pay Medicare premiums and other eligible healthcare costs.

• It’s also a good idea to budget for out-of-pocket expenses. Even with good insurance, co-pays, deductibles, and non-covered services can add up. A dedicated healthcare fund can help you manage these costs without dipping into your other retirement savings.

• Finally, stay healthy! Regular check-ups, a balanced diet, and staying active can help prevent chronic conditions and reduce healthcare costs over the long term. Investing in your health now can pay off in significant savings down the road.

New podcast: Learn how to protect your retirement savings as inflation persists.

Think about how hard you’ve worked to be in a comfortable position to retire into your golden years. But what happens if you suddenly pass away without documenting how and who should receive your assets? Your loved ones could be subjected to years of expensive probate court.

That’s where legacy and estate planning in Roseville comes into play. An estate plan ensures your assets go where you want them to and your loved ones are cared for when you and your spouse are gone. Keep in mind that it’s never too early or late to start planning for the distribution of your assets.

While discussing your plans with your family may not always be comfortable, it’s something that you should do. Discussing your wishes can prevent misunderstandings and conflicts later on. With careful planning and open communication, you can create a legacy that reflects your values and provides maximum benefits for your loved ones and the causes you believe in.

Remember some key points as you start the estate planning process.

1. You already know it’s important to have a will. This document outlines your wishes for the distribution of your assets, and you can also designate guardians for your minor children. Without a will, the state decides how your assets are divided, which may not be in alignment with your wishes.
2. Trusts are another valuable tool in estate planning. They may potentially help manage and protect your assets, avoid probate, and provide for your beneficiaries. Living trusts are particularly popular because they allow you to control your assets while alive and specify how they should be distributed after the demise of the surviving spouse.
3. Remember to designate beneficiaries on your retirement accounts and life insurance policies. These designations supersede what’s written in your will, so keeping them up to date is crucial.
4. You should also have a Power of attorney in place, which allows someone you trust to make financial and medical decisions on your behalf if you become incapacitated. There are different types of power of attorney, so discuss which one best suits your needs with a financial planner.
5. Proper tax planning strategies can assist in preserving more of your estate for your heirs. 
6. Charitable giving can also be part of your legacy. Setting up charitable trusts can provide tax benefits and support for causes you care about.

The good news is that you have access to an abundance of financial advisors. The bad news is that it may not be as easy to determine which financial advisor in California suits you and your family.

When looking for a financial advisor, asking the right questions can make all the difference. You want to make an objective hiring decision and limit the impact of the advisor’s personality and sales skills. 

Following are ten top questions to ask potential advisors to help you make an informed decision:

• Are you a financial fiduciary?

A fiduciary should prioritize your interests, recommending higher quality investments that suit your needs. A fiduciary is also the highest ethical standard in the financial service industry. Not all advisors are fiduciaries, so it pays to ask.

• What services do you offer?

Understand their full range of services, from retirement planning to investment management, to determine whether they can meet your needs.

• How do you get paid?

Ask about their fee structure. Do they charge a flat fee, an hourly rate, or a percentage of assets under management? Are they receiving a commission from a third party? Transparency is crucial here.

• What will my total costs be?

Besides the advisor’s fees, there are other costs to consider, such as custodial fees, money manager fees, and possibly trading fees. These are important to know and understand because they can significantly impact your net results. This is an important question, and you should require a written response to avoid miscommunication. 

• What is your investment philosophy?

Make sure their approach aligns with your financial goals and risk tolerance.

• Do you have any compliance disclosures on your record? 

You can research an advisor’s compliance background by checking FINRA’s BrokerCheck platform or the SEC’s IARD site.

• What type of clients do you serve? 

Find out if the advisor serves clients similar to you. This can help you gauge how well-versed they are in dealing with financial matters similar to yours. 

• How will you customize your advice for my specific situation?

You want to know how they will tailor their recommendations to fit your unique financial circumstances and goals.

• How and how often will we communicate?

Clarify how frequently you’ll have meetings or updates and whether it will be in person, by phone, or online.

• What happens if I have a financial emergency?

Find out how accessible they are during urgent situations and how they handle unexpected financial issues.