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Retirement Planning: It’s time to make it foremost on your mind

By Peter C. Karp

Retirement Planning

If you’re like me, retirement was the last thing on your mind when you graduated college. You had plenty of time for that “later.” Today is that later, and with pension plans disappearing and life expectancies increasing, now is a good time to take inventory of your retirement. Are you on track to reach your income goals? How much money do you need to supplement social security?

Planning for retirement can be an overwhelming task even for those with the best of intentions. It is especially daunting for individuals who are part of the sandwich generation. The term is directed at folks who find themselves caring simultaneously for their children and their aging parents. The focus should be paying yourself first as you look toward transitioning into retirement. In addition, a few guiding principles can help you reach your goals: Paying down debt is paramount. Live below your means if possible. It is important to be realistic about how much money you will need to fuel the retirement lifestyle you envision, and to continually rebalance your portfolio as you move toward retirement.

Some people put off retirement planning because predicting what your life will look like several years down the road is a difficult task. If you want a certain level of retirement income you might have to delay retirement or perhaps adjust expectations about lifestyle during retirement. Retirement is less an event than a process. Many people choose to work part time during their golden years, either in their same professions or in new ones. With so many unknowns, analyzing retirement readiness goes well beyond simple arithmetic. It’s no longer about plugging numbers into a calculator (retirement earnings times the rate of return minus expenses). At best, this approach will yield a rough approximation; at worst, it will provide a false sense of security.

The Monte Carlo method simulates various potential market scenarios in order to stress test your retirement income plan. This technique increases the accuracy of retirement analysis. The process produces a success rate between 0 and 100 that represents the percentage of simulations that are at or above goal (not running out of money before the end of the projected lifespan).

Our focus is constructing a retirement income portfolio that includes safeguards to prevent you from running out of money when you need it the most. We can help you to prioritize your goals and explore strategies to help you meet them. Rather than take on the responsibility yourself, call us, and we will be happy to design a retirement income proposal to suit your needs.

If you are a business owner, certain plan design strategies can help you substantially reduce your taxes and accelerate your retirement savings by allowing you to defer well beyond the 401(k) annual limits of $53,000 for 2015. At Karp Capital Management we work with business owners to craft retirement plans that meet the needs of the business and its employees while complying with all aspects of retirement plan rules and regulations.

Disclosure: The posted information is for informational purposes only. This message does not constitute an offer to sell or a solicitation of an offer to buy any security. All opinions and estimates constitute Karp Capital's judgment as of the date of the report and are subject to change without notice. Accordingly, no representation or warranty, expressed or otherwise, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or timeliness of the information contained herein. Securities offered through Infinity Financial Services (a registered broker-dealer, member FINRA, SIPC). Infinity Financial Services and Karp Capital Management are not affiliated companies.