Once you are in your 60s, you are likely to focus less on growing your retirement funds than answering, “When do I retire?” And once you crack open your nest egg, how should you allocate its contents? The answer often lies in a substantial shift in your investment strategy. Here are some ideas for investing in your 60s and beyond.

Preliminary Questions

Before you settle on a plan, you need to be able to answer a few questions. These include:

• How long do you need your savings to last, and how long are you likely to live?
• How many years might you be in retirement?
• What are your expected annual expenses in retirement?
• What is your non-invested income, such as pensions, Social Security, and annuity payments?

By having an idea of how much you need in retirement and how much income you may expect to receive outside of your investments, you then calculate how much you need to withdraw from your retirement funds.

Allocating Your Retirement Assets

Everyone’s safety threshold is different—but most people appreciate having a balanced portfolio of CDs and high-yield savings accounts with stock holdings. However, a too-conservative portfolio may not earn enough to outpace inflation, while a too-aggressive portfolio might leave you vulnerable to sudden market drops.

There are a few different ways to approach this. One of the most popular ones is the “glide path” strategy.1 Subtract your age from 100, and that is the proportion of assets you should have in stocks. So, for example, a 40-year-old would want at least 60% of their portfolio in stocks; a 70-year-old would want no more than 30% of their portfolio in stocks. The remainder of the portfolio’s allocations might be to bonds, CDs, money-market accounts, or other assets.

Planning Withdrawals from Your Accounts

Once you become a certain age, you are subject to the required minimum distributions (RMDs).2 These are annual minimum distributions you must take from a traditional individual retirement account (IRA) and 401(k) plans. The Secure Act 2.0 increases the age that RMDs begin to age 73 for individuals who turn 72 on or after January 1, 2023. Also, a person who is 72 in 2023 is not required to take an RMD for 2023. Because RMDs increase your taxable income, many approaching 73 might benefit from working with a financial professional to manage their tax liability or reallocate withdrawals into other accounts.

But before RMDs become an issue, you may still need to make regular cash withdrawals from your retirement accounts. Some accomplish this by withdrawing a flat 3% of their initial balance each year, adjusting for inflation. Depending on the investments in the portfolio, these modest withdrawals may maintain or permit your portfolio to grow from year to year.

Whatever system you choose, it is important to be consistent. However, if a particular method is not working for you, switching to something that does is fine. A financial professional may help you evaluate where you are, discuss your goals and expectations, and design a plan to help manage resources.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05361931

Footnotes

1 Glide Path

https://corporatefinanceinstitute.com/resources/wealth-management/glide-path

2 Retirement Plan and IRA Required Minimum Distributions

https://www.investopedia.com/secure-2-0-definition-5225115

For small business owners, ensuring your investment is covered is critical to ensuring the survival of your business after you are gone. One of the ways in which small business owners do this is by applying for life insurance in the event they were to die before they retire. Life insurance benefits small business owners and their heirs in many ways, from providing for loved ones to providing financial stability to your company after you’re gone. Check out some of the more important reasons small business owners should carry one or more life insurance policies for their business.

1. To Ensure the Business Will Continue

One of the biggest reasons small business owners purchase life insurance is for the continued survival of their business after their death. When a small business owner passes, finding people to replace their responsibilities and deal with all of the costs of succession may be an unnecessary struggle. A life insurance policy will help your business to find a suitable replacement for your duties, help pay off business debts to improve company cash flow and provide the company with the funds to handle unexpected expenses that may come up. If you have a life insurance policy with a cash value, you will also have the ability to tap into those funds if the business is struggling. This is an added benefit many life insurance policies may bring.1

2. To Satisfy a Partnership Agreement

You probably have a partnership agreement if you own a small business with others. These agreements plan for the event of death or disability of one of the partners. In most agreements, the remaining partners will be able to buy out the shares of the partner who passed or became permanently disabled. Even when business is good, it may be difficult for the other partners to buy the shares from the survivor’s family, depending on their equity. The life insurance policy will often be used to buy these shares from the deceased partner’s heirs.1

3. It May Be Required for a Loan

Suppose you fund your business with a small business loan or have taken one out to gain additional capital. In that case, the bank may require a Buy/Sell agreement and life insurance policy for the business owners that are guaranteeing the loan. While this is not always a requirement and will depend on the loan amount, the bank, and their underwriting requirements, it may be expected if the lender suspects the business may struggle if the owner were suddenly gone. Essentially, the bank will want to ensure that their debt will be covered in the event of your death, which means the policy will typically need to be a larger amount than the loan debt if required.2

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or business owner. To determine which insurance product(s) may be appropriate for you, consult your financial professional prior to purchasing.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05361929

Footnotes:

1 “Life Insurance For Business Owners: Types, Tips & More,” Forbes https://www.forbes.com/advisor/life-insurance/life-insurance-for-business-owners/

2 ”Protect the Future of Your Small Business With Life Insurance—Yes, Life Insurance,” All Business, https://www.allbusiness.com/protect-the-future-of-your-small-business-with-life-insurance-104608-1.html

Whether you are an employee in corporate America or a small business owner, retirement is a part of life. For many, the thought of retiring and whether or not you are ready to take those first steps might be overwhelming or intimidating. Ancient philosopher Lao Tzu once said, “The journey of a thousand miles begins with one step.” [i] Here is a 6 question checklist for small business owners to ask themselves to determine if they are ready for retirement.

☐  Have I decided on a retirement timeline? Most people don’t wake up one day and decide that they will retire tomorrow. It is a decision that requires years of preparation. Knowing when you want to retire is the first step toward pursuing this goal.

☐  Do I have enough money set aside to maintain my quality of life after retirement? This might seem like a no-brainer when it comes to retirement, but many small business owners wonder if they will have enough to comfortably retire. Experts suggest that upon retirement, you want to have at least 10 times your annual salary in savings. Here are a few more questions to consider in preparation for retirement: [ii]

• Are your debts paid off?
• Will you be able to pay your retirement expenses (both entertainment and bills) long-term without having to eventually depend on social security?
• Will the 4 percent rule be an approach that is feasible for you? (The 4 percent rule refers to being able to live off of 4 percent of your invested money in the first year of retirement, then increase or decrease the amount to account for inflation in subsequent years). [iii]

☐  Is my retirement portfolio diversified enough? Selling your business is one way to fund your retirement, but you don’t want it to be the only means that you depend on. Small business owners don’t have the luxury of retirement plans offered to employees of larger companies. You have to take it upon yourself to set up a self-employed 401(k), SIMPLE or SEP IRA, or another forms of retirement savings plan. You can invest in stocks and bonds, CDs, real estate, or some form of alternative investment to help mitigate the risk of one of your investment instruments not performing as expected due to some unforeseen issue or market fluctuation. Consider consulting a financial professional to help you learn what suitable course of action to take to try and lessen the chances making unnecessary mistakes. [iv]

☐  Do I have a post-retirement plan? Having a post-retirement plan can help you find purpose in retirement. There are countless stories out there of people that have saved and invested money for their entire careers so they could retire. They looked forward to the freedom of waking up and doing whatever they want every day; however, a year after retiring, they realize they miss the day-to-day grind of the workforce. Why is that? Simply put, going to work had given them a purpose in their lives.

They were working to provide a comfortable life for their family and saving for retirement. That is why writing out attainable goals, making checklists, and regularly referring to them are important skills to cultivate, especially for retirees.  Figure out what your new purpose will be after you retire. Write it down in a notebook and revise these plans periodically. These ideas don’t just entail financial plans and objectives, but lifestyle goals, and hobbies that you may be interested in pursuing but never had time before.

☐  Is my succession plan in order? Establishing a succession plan is not something that is done quickly. It requires planning and analysis, and business owners will often take years preparing to have their business passed on or sold to the right buyer. To start you want to:

• Determine the market value of your business?
• Identify succession candidates.
• Communicate your succession intentions with employees.
• Periodically review and revise your plans as you see fit.
• Stay up-to-date on tax planning and evolving tax laws. [v]

☐  Have I discussed my decisions and options with a financial professional? Creating a retirement plan is complex, and consulting a financial professional can help you design a course of action that works for you and your goals. When it comes to long-term financial goals, time is your greatest commodity, so the sooner you take action, the easier it will be to pursue your objectives.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

CD’s are FDIC Insured and offer a fixed rate of return if held to maturity.

Investments in real estate may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Other risks can include, but are not limited to, declines in the value of real estate, potential illiquidity, risks related to general and economic conditions, stage of development, and defaults by borrower.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative instruments may accelerate the velocity of potential losses.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

Footnotes:

[i] Lao Tzu Quotes – BrainyQuote

[ii] 6 Signs You Have Enough Saved for Retirement, According to CFPs (businessinsider.com)

[iii] What is the 4% Rule and How Can It Help You Save for Retirement? (cnbc.com)

[iv]  Retirement Accounts Are Filling up—How Diversified Are They? (usmoneyreserve.com)

[v] Selling a Small Business and Succession Planning for a Small Business (sba.gov)

LPL Tracking # 1-05362322