Retirement isn’t as simple as it used to be. Today’s retirees can’t just focus on when they want to downsize or where they want to golf next; they’re juggling responsibilities that much of the previous generations didn’t have to face. Thanks to medical advancements and improved quality of life, people are living longer–which means you need to save more in anticipation of a longer retirement for yourself, and there’s a good chance you’re caring for elderly parents. The 2008 recession, a global pandemic, and now, a housing crisis mean many retirees are supporting adult children while they try to get back onto their feet. For many, grandchildren are also on the list of responsibilities, whether that’s through the desire to leave an inheritance or to help them with the climbing costs of higher education.
That’s a lot of responsibility! If you’re feeling the pinch of being in the sandwich generation, it can easily feel like your retirement keeps dropping lower and lower on the list of priorities. Thankfully, there are reliable, proven retirement strategies that can help you plan your future while taking care of your loved ones.
Make Sure There’s Enough for You
Remember the pre-flight instructions you heard the last time you boarded a plane? Put your own oxygen mask on first before assisting others. Prioritizing your own financial needs can feel selfish, but remember: if you don’t plan adequately for your own needs, you risk becoming a financial burden to your children.
Three of the biggest uncertainties retirees face are healthcare costs, market fluctuation, and taxes. All are unpredictable, but that doesn’t mean you have to save with nothing more than a hope and a prayer. We specialize in helping retirees limit the impact of these uncertainties with stable, reliable retirement income through Modern Annuities® and flexible, tax-adantaged savings in Modern Life Insurance™ products. Both of these products can be created with flexibility in mind, such as a Return of Premium rider, so that you’re not stuck with exorbitant fees or a use-it-or-lose-it format.
Maximize What You Have
With so many financial obligations, many retirees find themselves scrambling to stretch their money further, but are understandably wary of taking on more financial risk. Can you make your money do more without investing aggressively? Thankfully, the answer is yes! We do that by reducing your taxes in retirement and limiting the impact of market fluctuations.
A Roth IRA conversion allows you to shift money from a traditional IRA or 401(k) to a Roth IRA, paying taxes on the amount converted today so future withdrawals are tax-free. This strategy is particularly valuable if:
- You expect to be in a higher tax bracket later in retirement
- You want to leave tax-free assets to children or grandchildren
- You’re trying to reduce future RMDs to protect income-based Medicare premiums or avoid taxes on Social Security
A phased Roth conversion, especially in years when income is temporarily lower (say, after a job change, retirement, or helping a child financially), can be a tax-savvy move that allows you to pay taxes when you know what you’ll owe, instead of leaving it up to chance. Otherwise, you could be forced to withdraw more than you planned to in retirement, just to cover your tax liability.
Fixed Index Annuities (FIAs) offer a powerful solution for those in or near retirement who want growth potential without full market exposure. FIAs provide the opportunity to earn interest based on the performance of a market index (like the S&P 500), but with downside protection; your principal is not at risk due to market losses. Win-win!
This makes FIAs particularly appealing for triple-decker caregivers. With so many financial responsibilities already in play, reducing one major source of risk and uncertainty in your retirement strategy can be a welcome relief. An FIA can help you:
- Supplement future retirement income
- Avoid withdrawing from volatile investment accounts during market dips
- Reduce the anxiety of market timing and economic unpredictability
Determine How Much Help You Can Offer
Once you’ve made sure your future is taken care of and you’re maximizing what your savings can do for you, you can sit down and calculate how much you can afford to help your loved ones. Budgeting is a great way to do this, but it also helps if you have flexible access to your savings. If all of your assets are tied up in tax-deferred accounts, you’ll trigger taxes by withdrawing extra to build that ADU for your mom or lending a hand with your child’s down payment on a house.
With a properly structured Modern Life Insurance™ policy, you have the option to use your policy funds for Long-Term Care needs, but you can also access the cash value in the form of a tax-free policy loan. If you don’t use it for either, or if you take out a policy loan and repay it, you’ll be able to leave a tax-free death benefit to your beneficiaries. And if you want even more flexibility, you can purchase a Return-of-Premium rider and buy out your policy. You can see why we love this strategy for retirees! It offers a flexible, tax-advantaged way to save for whichever needs are most pressing, whether it’s your own care or legacy needs, or access to liquidity for emergencies.
Strategize for A Secure Future
At Parady Financial Group, we know what it’s like to feel like you’re being pulled into a pretzel of family duties and financial obligations. It can be hard to plan clearly from a place of pressure, which is why we’ve spent decades identifying strategies to help you free up your savings. You shouldn’t have to choose between your retirement dreams and your loved ones. We’ve helped thousands of retirees navigate financial worries and challenges just like the one’s you’re facing, and we can’t help you get to the other side of them. Reach out to get started.
