The Retirement Red Zone

The Danger Zone: 5 Years Either Side of Your Retirement Date

In the NFL stats and the facts about the Red Zone are crunched and processed through a gauntlet of analytics in attempt to craft a game plan that will maximize the time in the Red Zone. But often the results are basically the same: just a field goal. So one of the axioms of the NFL is that accumulate yardage doesn’t necessarily equate to points on the board. Accumulating money doesn’t mean much if adviser fees, fund expenses and plan administration costs erode your investment return. That’s why it’s in your interest as a retirement plan participant to know the score on these three critical items. 

After the market meltdown of 2008, many baby boomers doubled down on high risk investments in an attempt to make up for losses. Other baby boomers have been on the sidelines for the last five years, fearful of entering the market again. Both could be huge mistakes just before retirement. One of the biggest mistakes during the last five years before retirement is not working long enough because you haven’t anticipated your projected life expectancy.

After retirement, one of the biggest mistakes during the first five years is not participating in a hybrid retirement, working part time with full retirement income. Again, life expectancy is ever evolving and it’s the number one risk in retirement. Another mistake is not taking into consideration taxation on qualified retirement funds and their correlation to Social Security benefit taxation. Many financial advisors tout the benefits of tax correlation and tax diversity in retirement to generate more spendable income. 

 Delaying the Social Security benefits of the primary breadwinner until age 70 can generate a dramatic increase in Social Security income. Delaying qualified retirement plan income until age 70½ may also increase your overall payout of your qualified retirement plan. If you can defer qualified plan distributions, then consider using a Qualified Longevity Annuity Contract (QLAC) that lower your required minimum distributions by deferring them as far out age 85. These are just a few ideas from the retirement planner playbook. So when you enter the retirement red zone, you make the most out of it.

Wathc the video of On the Money News with news anchor and syndicated financial columnist Steve Savant.http://www.onthemoneynews.com/the-retirement-red-zone-on-the-money-news/

For more information on how you make the right moves in the retirement red zone, just email me… steve@onthemoneynews.com