If you are like most American workers that have planned for retirement, you have probably been funding a company sponsored salary deferral plan such as a 401(k), 403(b) or 457 for a number of years waiting for that magic moment when you can flip a switch and enjoy a comfortable or beyond comfortable lifestyle.
Managing your 401(k) during your career was likely a pretty straightforward endeavor: check a box or two on your company’s forms or website to let them know how much they could take out of your paycheck, pick one or maybe a few mutual funds off a relatively simple list, and tweak those two things from time to time depending on whether you received a raise to your income or funds in your 401(k) performed the way they should have been. Over the years it was probably really encouraging, maybe even exciting at times, to see your statement balance grow because of your savings and the global economy expanding over time.
Retirement is a bit of a game changer for just about everybody, though, because the transition from building for retirement to taking money out of your retirement accounts adds a new level of emotion to your situation. You have worked hard and long to build a nest egg and are finally starting a hopefully long process of depleting it over your life time. For many of us it is not simple to reconcile the reality that our account balances may consequently move lower when withdrawals exceed returns. Retirement also complicates life because you have to do more frequent work to manage your investments to accommodate those withdrawals. Simply put, you have to sell stuff from time to time to come up with the money to send to your bank account. What do you sell? When? How much? You also must regularly rebalance your accounts after retirement (as you should have been doing before you retired) and maintain the mix of growth, income and capital preservation in your investments that is consistent with your goals, timeframe, and tolerance for the ups and downs of the markets. Maybe you have the time, inclination, experience and discipline to do this for yourself, but maybe you do not. That is where someone like GBB comes into your life’s picture.
To be fair, there may be some advantages to remaining in your company’s retirement plan, assuming your former employer will let you stay in there after you retire. Be mindful they may not want to keep you in their plan after you retire for any number of reasons including costs and liability. It may also become a problem for you should you want to take periodic withdrawals from your account because the plan may simply disallow it. If you can stay in the plan, it is possible the investments available to you are excellent, have a low cost and are easy enough for you to handle. You’d have to ask yourself, though, whether you know you have what it takes to be patient when times get tough and the willingness to avoid chasing returns when times are good for the markets. For those that would prefer to collaborate with experienced professionals that have a long history of helping retirees, rolling retirement plan funds out of the company sponsored plan into an account that could be managed by GBB may be in their best interest. We make a difference for a large number of retirees by collaborating with them to behave the way they need to behave to succeed financially.
More often than not we begin by designing and implementing a sustainable spending plan at the core of which is an investment strategy tailored to their particular circumstances. Part of the financial planning process is to help retirees figure out what they should do with their Social Security benefits or other retirement income sources such as rental real estate. We help clients figure out how their income affects when and how much they should withdraw from their retirement accounts to get them to where they need to be for their spending goals. At age 70 ½ we help our clients figure out what they are required under IRS rules and regulations to withdraw from their retirement accounts. Our investment committee does the heavy lifting to identify quality investments, to keep costs low, and to periodically change strategy to keep up with opportunities in the global financial markets. Our advisors do what it takes to manage account withdrawals and rebalance accounts from time to time. Along the way we periodically keep retirees apprised of how they are doing relative to their financial goals, and keep them on track with their spending and investment strategy when times are tough and they are tempted to become too conservative or when times are great and are overly enthusiastic about taking on risk.
If you are about to retire or are already retired, congratulations. We would be honored to hear from you at 916-924-7527 or by completing our contact form. You can reach the author of this article, Rod Waterbury, also by email at firstname.lastname@example.org.