Guest Blog Post by Dee Dee Baze, CFP Alphemita Financial Services

Intro: Dee Dee has been gracious enough to share her area of expertise as Linda and I focus on helping our community work on advanced life planning. We can help with planning for your healthcare needs but other professionals are better suited to assist you in planning for your finances and your estate. Here is Dee Dee’s guest post for you.

Pam and Linda

Retirement planning can be a daunting task, but it’s essential to secure your future and prepare for the unexpected. I am thankful Pam and Linda have allowed me to share what lifelong financial planning is. For this article I’ll focus on retirement planning, though we always look at the big picture of every aspect of your lives.

One of the most enjoyable parts of my job is to help people transition into retirement. My husband retired back in 2015 and even though I had worked the numbers over and over it was still scary.

Why?

Because it was something neither one of us had ever been through before. You know, like taking a new highway, eating at a new restaurant, buying a new house. Some people love the thrill of something new. As a couple we approach things with caution, do our research, then take calculated risks.

So, it was a calculated risk. My husband was only 51 years old. Yet, it turned out better than we had planned.

That is why I thoroughly enjoy taking other people through the journey from preparation to retirement.  It is no longer scary to me, but I also understand the emotions that go along with it. 

Planning for retirement doesn’t only involve saving money, but it also requires taking into account life events that could affect your retirement. Some unexpected events such as the death of a spouse, decline in health, or a catastrophic health occurrence can impact your retirement plans significantly. However, with proper planning, you can prepare for the unexpected and enjoy your retirement years.

I’m going to greatly simplify the process I take people through, but I want you to understand what we analyze together.

Step 1 Look at your current situation

1. Analyze Your Income and Taxes You Pay Now—You can look at last year’s taxes, or if you are a W-2 employee look at your pay statements. It’s important to know what you are bringing in and what taxes you are paying.
2. Analyze Your Spending—how much do you need each month to stay at the same standard of living in retirement?
3. Analyze Your Debt—What are monthly payments, total amount owed, interest rates charged? When could you have these paid off or paid down? Do you need to pay off things before retirement or will you have enough income coming in to keep making the payments?
4. Analyze Your Savings & Investments—Do you have an emergency fund? Do you have cash on hand? How are your investments allocated? Is it appropriate for the time from when you’ll start taking withdrawals? Anything you want to use in the next 1-2 years needs to be in something that has minimal risk to the principal.
5. Analyze All Your Insurance Policies—What do you have now, including employee benefits? Will you still need it in retirement? What goes away when you leave the company? If catastrophe strikes, how much are you covered? (Income replacement, property replacement, long term health care costs)
6. Analyze Your Estate Plan—Do you have an updated will or trust? Are all the people you appointed as POAs, beneficiaries, trustees still what you want? Do you know exactly what happens to ALL of your stuff if you passed away unexpectedly?

Step 2 Define what will your retirement look like?

1. What income will you have coming in? (For example: Pension, Social Security, Retirement Investment Withdrawals, Non-Retirement Investment Withdrawals, Rental Property Income, Withdrawals from a Trust) Know if there are special rules around taking money from any of these. For instance, I strongly recommend you speak with a professional about the timing of when to take your social security benefit (assuming you qualify for it).
2. How will you pay for health Insurance? (At the age of 65 you can pay for Medicare. What will you do prior to that?)
3. Will your spending habits change or be about the same? (Will you have anything like your house, cars, or debts paid off by then? Will you be adding any payments?)
4. With the income coming in at retirement what kind of taxes will you be paying? (Income tax, short-term or long-term capital gains)
5. Do you wish to leave a legacy? If so, what type of financial tools do you need to accomplish what you want to accomplish?
6. Have you accounted for inflation? (Do your sources of income increase over time or are they fixed? If they are fixed, how will you adjust for inflation?)
7. Do you have money earmarked for special things like travel, remodeling your home, college, gifts, a new car, etc.?

It can be a long process to go through all this stuff, but it is worth your peace of mind knowing exactly where you stand and if your desired retirement date is a logical choice. In addition to that you will be able to see potentially what happens to your assets in the case of a long term illness. 

One other thing I should mention. Something I believe is truly important that is left out of most financial planning is a deeper look at YOU. Before I get into the steps mentioned above I actually like to have a deep conversation with you about your relationship with money.

Meaning— Do you have limiting beliefs that make you play small or shame yourself for not being enough? Do you have subconscious behaviors that sabotage how you manage your money? You need to understand how you operate when it comes to money, because your behaviors can enhance or derail the best financial planning.

Finally, I am a believer of trying to align your money with your deepest held values. There is something that feels so good when you know your hard-earned dollars are going to support companies that you align with and you deliberately stay away from companies that go against what you believe.

 I help people align their money with themselves.

If you would like more guidance in this area, you are welcome to contact me directly or simply order a free copy of my book, Soul Based Financial Planning: A guide to understanding your relationship with money and aligning with your life’s purpose. https://www.alphemita.com/freeoffer