Reviewing and Updating Your Retirement Plan

Achieving a comfortable retirement requires more than just a written outline—it demands a strategy that evolves with changing financial landscapes.

A national opinion poll finds that working-age Americans are increasingly worried about retirement.

According to the ‘Retirement Insecurity 2024: Americans’ Views of Retirement’ study, when asked if the nation faces a retirement crisis, 79 percent of Americans agree there indeed is a retirement crisis, up from 67 percent in 2020. More than half of Americans (55 percent) are concerned that they cannot achieve financial security in retirement. When it comes to inflation, 73 percent of respondents said recent inflation has them more concerned about retirement.

Furthermore, 40% of Iowa’s private sector workforce, or 483,000 workers, do not have access to a retirement savings plan through their jobs. The Pew Charitable Trusts estimates that if this situation doesn’t change, the state could face a total cost of $2 billion in inadequate retirement savings by 2040.

In this blog, we explore the importance of having a solid retirement plan and why regularly reviewing and adjusting your strategies is crucial for staying financially secure during your golden years.

Understanding the Importance of a Retirement Plan

A retirement plan serves as a roadmap for achieving your financial security in your later years. It encompasses a comprehensive assessment of your savings, investments, healthcare needs, and long-term goals.

However, life is dynamic, and so too are your financial circumstances. Regularly reviewing your retirement plan helps ensure it remains aligned with your evolving needs, goals, and the external environment.

Why Regular Reviews Are Necessary

1. Adapting to Life Changes

Life is full of transitions that can significantly impact your retirement strategy. Whether it’s a career change, a shift in your health, or even evolving family dynamics through gray divorce or separation, these changes often come with financial implications.

A new job may offer different retirement benefits, or a major health event could lead to unexpected expenses. A separation could involve dividing assets. Each of these life changes necessitates a reevaluation of your retirement plan to help ensure it aligns with your current circumstances and long-term goals.

Whenever you experience a significant life event—such as changing jobs, relocating, or facing health challenges—take the time to review and adjust your retirement plan. Doing so helps ensure that your strategy stays relevant and responsive to your evolving needs.

2. Market Fluctuations and Economic Changes

Financial markets are inherently unpredictable, and economic factors such as interest rates, inflation, and stock market performance can impact your retirement portfolio.

For example, rising inflation could erode your purchasing power in retirement, while changes in interest rates may affect the returns on your investments. These fluctuations make it essential to regularly review and adjust your investment strategy to keep your retirement savings on track.

Staying informed about economic trends allows you to proactively adapt your retirement plan. By revisiting your portfolio and financial strategies in response to these shifts, you can help safeguard your savings and make the most of your investments.

3. Assessing Your Goals and Objectives

As you get closer to retirement, your personal goals may evolve. Perhaps you’re considering downsizing, traveling the world, or helping fund your grandchildren’s education. These new aspirations should be reflected in your retirement plan to help ensure your finances support your vision for the future.

It’s crucial to set regular intervals—whether annually or semi-annually—to revisit and assess your retirement goals. This practice allows you to recalibrate your strategies, helping ensure that your financial plan continues to align with your evolving priorities and dreams for retirement.

Key Benefits of Regularly Updating Your Retirement Plan

1. Enhanced Financial Security

For high-net-worth individuals (HNWIs), financial stakes are typically higher, and an updated retirement plan is essential in helping to maintain security. By regularly reviewing your plan, you can help identify potential risks, such as market volatility, inflation, or unexpected life events, and adjust your strategies to mitigate them.

For example, reallocating assets or adjusting withdrawal strategies can help protect your wealth from market fluctuations or economic downturns.

Staying proactive in updating your retirement plan not only safeguards your assets but also helps ensure that you’re better prepared to weather unforeseen financial challenges, giving you greater peace of mind as you approach retirement.

2. Optimizing Tax Strategies

Tax laws frequently change, and failing to adjust your retirement plan in response can lead to avoidable tax liabilities. Regular reviews of your plan allow you to stay informed about these changes and take advantage of opportunities to help minimize taxes.

This could involve:

Adjusting how you withdraw funds from retirement accounts
Optimizing contributions to tax-advantaged accounts
Exploring strategies like Roth conversions

Staying on top of tax legislation and its implications can help ensure that your retirement savings work more efficiently for you, helping to preserve more of your wealth for the future.

3. Improved Investment Performance

The performance of your retirement investments is closely tied to market conditions and your evolving goals. Regularly reviewing and adjusting your investment portfolio is crucial to helping optimize returns while managing risk. Periodically reassessing your asset allocation, rebalancing your portfolio, or shifting investments to align with changes in the market or your risk tolerance can help improve overall performance.

Making these adjustments in a timely manner can also significantly impact the growth of your retirement savings, helping ensure that your investment strategies are aligned with both current market conditions and your long-term financial objectives.

4. Planning for Healthcare Costs

As you approach retirement, healthcare costs become an increasingly important factor to consider in your planning.

Unexpected medical expenses can quickly add up, and without proper planning, they can deplete your savings. By regularly updating your retirement plan, you can account for rising healthcare costs, including long-term care, insurance premiums, and out-of-pocket expenses.

Incorporating healthcare costs into your retirement budget helps ensure that you’re prepared for these expenses, helping to create a more realistic financial plan that supports a comfortable and secure retirement.

Tips for Effective Retirement Plan Reviews

Set a Schedule: Establishing a regular review schedule—at least once a year—is essential. This frequency helps ensure that you remain proactive rather than reactive to changes in your life or the economy.
Document Changes and Insights: Keep a record of your retirement reviews, including any changes made and the rationale behind them. This documentation will allow you to track your progress and help ensure that your retirement plan remains aligned with your goals over time.
Be Open to Change: As your circumstances evolve, your retirement plan may require significant shifts. Being flexible and open to change can lead to improved financial outcomes.
Involve a Fiduciary Advisor: Working with a fiduciary advisor can help enhance the effectiveness of your reviews. Fiduciaries can provide insights, market analysis, and strategies tailored to your unique situation. At Johnson Wealth and Income Management, we help clients navigate the complexities of retirement planning, particularly for those approaching retirement in Iowa.

How Johnson Wealth and Income Management Can Help

At Johnson Wealth and Income Management, we understand that the financial landscape is constantly evolving, especially for high-net-worth individuals approaching retirement. Our team of experienced fiduciary advisors is dedicated to providing personalized guidance to help you navigate these changes and optimize your retirement plan.

Here are several ways we can assist you:

Tailored Financial Planning: Every client has unique financial circumstances and goals. Our advisors take the time to understand your individual situation, assessing your assets, liabilities, and aspirations. We create a customized financial plan that aligns with your specific objectives, whether it’s funding a comfortable retirement, creating a legacy for your heirs, or achieving philanthropic goals.
Regular Reviews and Adjustments: We emphasize the importance of regular financial reviews. Our team will work with you to establish a review schedule that suits your needs, helping ensure that your financial plan remains current and effective. During these reviews, we will evaluate your financial performance, adjust your strategies as needed, and keep you informed about market conditions and economic changes that may impact your wealth.
Investment Management: Navigating the complexities of investment strategies can be daunting, especially for HNWIs. At Johnson Wealth and Income Management, we provide comprehensive investment management services designed to help optimize your portfolio. Our advisors leverage in-depth market analysis and investment research to guide you in making informed decisions and helping ensure your investments are aligned with your long-term goals.
Tax Optimization Strategies: Effective tax planning is crucial for helping preserve your wealth. Our team stays abreast of the latest tax laws and regulations, helping you implement strategies that help minimize your tax liabilities while maximizing your financial growth. This proactive approach can lead to significant savings over time, allowing you to retain more of your wealth.
Retirement and Healthcare Planning: As you approach retirement, planning for healthcare costs becomes increasingly important. Our team will help you assess potential healthcare expenses and incorporate them into your retirement plan. We also provide guidance on Social Security benefits, Medicare options, and long-term care strategies, helping ensure you are well-prepared for your retirement years.
Education and Empowerment: We believe that informed clients make the best decisions. Our team is committed to educating you about your financial options and empowering you to take an active role in your financial future. We provide resources, workshops, and one-on-one consultations to help ensure you have the knowledge necessary to make informed choices.

Final Thoughts

Regularly reviewing and updating your retirement plan is essential for HNWIs and affluent individuals approaching retirement in Iowa. By making these reviews a priority, you can navigate the complexities of retirement with confidence, helping to ensure a secure and prosperous future.

If you’re ready to take the next step in refining your retirement plan, contact Johnson Wealth and Income Management today. Visit our website at johnsonwim.com for more information.

Retirement Planning FAQs

How much money do I need to retire comfortably? The amount varies depending on your lifestyle, location, and financial goals. A common rule of thumb is to aim for 70-80% of your pre-retirement income, but it’s essential to assess personal expenses and retirement plans.
At what age should I start saving for retirement? The earlier, the better. Starting in your 20s or 30s allows more time for compound growth, but it’s never too late to begin. Those starting later may need to contribute more aggressively.
What is the difference between a 401(k) and an IRA? A 401(k) is an employer-sponsored retirement plan, often with matching contributions, while an IRA is an individual retirement account you open on your own. Both have tax advantages, but contribution limits and options may vary.
When should I start taking Social Security benefits? You can begin as early as age 62, but waiting until full retirement age (66-67) or even 70 can increase your monthly benefit. Deciding when depends on your health, financial needs, and other retirement income sources.
How can I help ensure I don’t outlive my savings? Strategies include diversifying investments, creating a withdrawal plan (like the 4% rule), and considering annuities or other guaranteed income sources to provide stability throughout retirement.

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