Retirement Planning: Chardonnay or Pinot Noir?

Don’t you love those retirement commercials with the grey-haired couple living their retirement dream opening their vineyard in Napa?   It seems that is the ultimate end game.  Wow, real estate in wine country must be soaring!  For most Americans the goal is not to spend their golden years crafting fine wines.  The goal is to have the means to support themselves.  Americans are living longer, which means that you need more money to take you into the ‘Golden Years.’  The advanced healthcare technologies and treatments that support longevity are costly.  It takes dedication to create and sustain a nest egg for every day expenses.  

Nearly all of your adult life, you focus on your career plan.  It’s equally important to establish a post-career plan.  Here are some basic tips for your retirement strategy. 

• Estimate your personal needs:  Online guides are helpful; however, your individual needs will depend upon things such as where you plan to live upon retirement and your particular lifestyle goals. 

• Start Early: Starting to save early and saving as much as possible is the smart way to amass wealth. 

• Automatic Contributions:   Establishing a regular contribution to a 401(k) is efficient and smart.  It provides an immediate tax deduction, tax-deferred growth on your savings, and often a matching contribution from your employer. 

• Periodic Contributions:  IRAs are an option for regular or periodic contributions and include a traditional IRA with tax-deferred growth or a Roth IRA that offers tax-free growth, meaning you owe no tax when you make withdrawals. However, there are rules governing withdrawals. You should always speak to a financial representative to understand how tax-deferred vehicles operate so you don’t run into trouble. 

• Investment Planning:  If you are not an expert, seek professional counsel regarding asset allocation.  Discuss the right mix of stocks, bonds, and other investment options. Just because William Devane is investing in gold, does not mean you should be doing the same. 

• Protecting Your Nest Egg:  After you so faithfully saved the money, resist temptations to decrease your contributions during lean years; similarly, do not make early deductions.   After you have retired, stick to a strategy for deductions.  For example, stretch your assets by drawing money from taxable accounts first and allow tax-advantaged accounts to compound for as long as possible.  Your tax advisor can help you make these decisions. 

• Supplemental Income:   Consider working on a consulting or part-time basis during your retirement years.  This offsets the amount you must draw from your funds.

If you have already committed to a retirement plan, cheers to you!  If you have not started saving, remember that it is never too early to start and it is never so late that you should give up trying.  Even at the age of 50, you can create a savings fund to feather your nest a bit for later years.   For those of you with dreams of producing an award-winning Chardonnay, don’t give up on that dream!  The rest of us are eager to taste the fruits of your labor.