You’ve Made it to Retirement! How a Financial Advisor Can Help with the Transition

Are you looking retirement dead in the face? Ready to trade in your work tension for a retirement pension? Are you merely months away from starting your extended seven-day weekends?

Well, congratulations! Pivoting into retirement is something most working Americans look forward to.

As you start the transition to this next phase in life, schedule some time to talk with your financial advisor. Yes, even when you’ve reached the end of your working life, a financial advisor can still help. Remember, retirement isn’t a finish line, but a new phase, as your Golden Years can stretch 20, 30 even 40 years in some situations.

At PAX Financial Group, we work with clients at all phases of their retirement journey. With our “pivoters,” those preparing for this next phase in life, we help them dot their I’s and cross their T’s. After all, you can’t have a successful r-e-t-i-r-e-m-e-n-t without it!

If you have concerns about your retirement, contact us. The team at PAX Financial Group is here to help.


Ready to PIVOT into retirement? Schedule a no-strings-attached conversation with the team at PAX Financial Group and let us help.


Can You Achieve Your Goals in Retirement?

Most of us have a working list of things we want to do in retirement, from travel more extensively to helping grandchildren with college costs. But if you want to do different things that you’ve done in your working life, it’s important to think about the financial aspects of goal achievement.


Will You Have Enough to Live On for a Comfortable Retirement?

One of the most common questions we’re asked about retirement is, Will I have enough to live on?

The answer boils down to two elements: Your expenses and your income.

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Many people assume their expenses will be less in retirement. But that’s not always the case. If your goals necessitate increased spending, you may be spending as much as you did while working – or even more.

Even if your goals don’t indicate more costs, you may be surprised at how much your expenses don’t drop in retirement. While any costs related to commuting to work may cease if you no longer drive to the office, for example, expenses such as healthcare and food may increase significantly.

It’s a good idea to try out the budget you’ve set for retirement. Live on your retirement budget for a few months while you’re still working. Do you have enough? Do you feel strapped? Talking to a financial advisor before you pivot out of work can help you correct any kinks in your plan.


Knowing how much income you can expect in retirement is another key step. For most people, income will flow from several streams, such as a 401(k), IRA, Social Security, a pension, annuities and sometimes even part-time work.

You may think you know how much you will receive from all these sources, but many of these income streams contain complexities that pre-retirees and retirees are unaware of.

The IRS, for example, mandates withdrawals of traditional retirement accounts like 401(k)s and IRAs at a certain age. These Required Minimum Distributions (RMDs) must be taken at the age of 72 or you face very steep tax penalties. (The age to start taking RMDs is 70-½ if you turned that age before January 1, 2020.)

Similarly, pre-retirees may not be aware that the IRS offers catch-up contributions to retirement plans for folks 50 years old and older. These can be extremely helpful to individuals trying to maximize their nest eggs before they retire.

The maximum 401(k) contribution is $19,500 per year if you’re under age 50. But once you turn 50, you can contribute an additional $6,500. The maximum IRA contribution is $6,000 per year for those under 50, but folks 50 and over can pitch in an additional $1,000 per year.

An update to your portfolio to adjust to a new risk tolerance may also create unknown changes. While many portfolios invest in stocks because of their relatively robust appreciation compared to bonds and cash, for example, stocks can be risky because they can drop in price, sometimes significantly. Bonds and cash, on the other hand, currently exhibit minimal appreciation potential, but a percentage of your portfolio allocated to them can protect against risk – and thus against your income suddenly dropping if stock markets fall.

Talk to your financial advisor about your risk tolerance in retirement.


How Long Will Your Retirement Last?

Worrying about how long their retirement funds will last is a key source of anxiety for many Americans. People may live two or three decades in retirement, or even longer.

There are many rules of thumb for retirement withdraw rates, but while these may work for the average retiree, they may not work for you. Talk to your financial advisor about a strategy that works for you. And then follow it!


Are You On Top of Social Security?

While Social Security won’t likely be enough to live on by itself, Social Security benefits are a crucial part to most Americans’ retirement plans. When to start claiming your benefits is a crucial decision that can have lifelong effects on your finances.

First, you may be aware that you can retire at 62. But are you aware that your benefits will be far less at that age than the amount you’ll receive at your full retirement age? Those who retire at age 62 receive benefits reduced by as much as 30 percent – and the reduction is permanent.

Second, many people assume that the amount of Social Security benefits is fixed once you hit your full retirement age. But you can in fact increase the amount you’ll receive by managing when you choose to receive your benefits. The amount increases roughly 8 percent for every year you wait between your full retirement age and the age of 70 (after which no more increases are possible). These increases, too, are permanent.

Third, there’s a widely held belief that Social Security benefits aren’t taxed. In reality, it depends on whether you work in addition to receiving benefits, how much you make and when you take benefits.


The Takeaway

Navigating Social Security can be extremely complicated. Retirement income can come from multiple places. Your expenses can actually increase in retirement if you look at healthcare, travel plans and, if you relocate, a higher cost of living than you’re used to. Withdraw plan rules of thumb may not be the best strategies for you.

If your retirement date is approaching, talk with a financial advisor to confirm you’re on the right track. If you’re not currently working with a financial advisor or feel it’s time to make a change, let us help. Contact the team at PAX Financial Group. A no-strings-conversation can have a big impact.

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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.


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