As retirement approaches, your dreams of leisurely days spent traveling, golfing, or enjoying quality time with family come into sharper focus. Yet, many pre-retirees unintentionally make financial decisions that can drastically undermine these dreams. Here’s how partnering with a professional financial planner can help you avoid common and costly mistakes and confidently move toward your ideal retirement.

The biggest mistake you can make is entering retirement without a solid financial plan. High inflation, fluctuating interest rates, and uncertain economic conditions mean you need clarity about your financial future more than ever. A financial planner helps you:

• Define clear retirement goals and determine how much you'll realistically need.

• Create strategic savings and investment plans tailored specifically to your situation.

• Continuously monitor your progress and make timely adjustments, ensuring you're on track for retirement.

Procrastinating on retirement savings reduces the power of compound growth, potentially costing you tens of thousands of dollars. Financial planners help by:

• Establishing a structured saving and investment approach, maximizing your returns through early and consistent contributions.

• Identifying opportunities to catch up on savings through strategic tax-advantaged accounts if you started late.

Healthcare is one of the largest expenses in retirement, and unexpected medical or long-term care costs can significantly deplete your savings. Financial planners guide you by:

• Navigating the complexities of Medicare and supplemental insurance plans, preventing costly enrollment mistakes and penalties.

• Advising on long-term care insurance solutions, locking in lower rates early and protecting your retirement nest egg from unforeseen medical expenses.

Taxes significantly impact your retirement savings. A financial planner ensures you effectively leverage:

• Traditional IRAs and 401(k)s to reduce current taxable income, enhancing immediate savings.

• Roth IRAs and Roth 401(k)s, allowing tax-free withdrawals during retirement, preserving your wealth when you need it most.

Conventional wisdom advises retiring debt-free, but sometimes retaining low-interest debt (like a mortgage) while investing your funds strategically can yield better long-term results. A financial planner can:

• Conduct thorough analyses to determine whether paying off certain debts early or investing your money provides greater financial benefit.

• Craft personalized debt management strategies that optimize your retirement income.

Too many pre-retirees claim Social Security too early, significantly reducing lifelong benefits. A financial planner helps you:

• Calculate the optimal age to begin receiving Social Security, considering your financial needs, health status, and family longevity.

• Strategize ways to maximize benefits, often increasing your monthly income substantially by delaying claims when feasible.

While the allure of relocating is strong, failing to research how your chosen location affects your retirement finances can lead to costly surprises. Financial planners help by:

• Assessing potential locations based on cost-of-living, healthcare accessibility, tax implications, and overall affordability.

• Ensuring relocation enhances your financial security and lifestyle goals rather than undermining them.

Retirement without purpose often results in overspending and dissatisfaction. A financial planner can:

• Help define a meaningful vision for retirement, aligning your financial strategies with your passions and priorities.

• Establish budgets and spending strategies that focus resources on what truly enriches your retirement experience.

Ready to turn your retirement dreams into reality? Schedule a consultation today and start building your ideal retirement future.

Imagine celebrating your 100th birthday surrounded by generations of family and friends. Once a rarity, reaching age 100 or beyond is becoming increasingly common, reshaping our perspectives on aging and retirement planning. As life expectancy continues to rise, proactive and thorough financial planning becomes more essential than ever.

Recent studies highlight an undeniable trend: more people are reaching age 100 than at any previous point in human history. According to research from the United Nations, the global population of centenarians is projected to reach approximately 3.7 million by 2050, up from about 593,000 in 2021. In the United States alone, the U.S. Census Bureau reports the number of centenarians grew by 50% between 2000 and 2014, and it's expected to increase eightfold by 2050.

Furthermore, a report by the Stanford Center on Longevity points out that today's children have more than a 50% chance of living beyond 100, drastically altering traditional views of retirement and financial security.

While strong employment and steady payroll taxes have temporarily bolstered the program's outlook, the long-term viability remains uncertain. A large part of the issue is that the population is aging, meaning the percentage of the population aged 65 and older is climbing. That means there is a lower number of workers per retiree paying taxes. That combined with a falling birthrate results in less money going into Social Security and the Social Security trust fund over time. Despite widespread apprehensions about the program's solvency, it is essential to dispel misconceptions about Social Security going "broke." Instead, the primary concern right now lies in the potential insolvency of the trust fund that pays a portion of Social Security benefits.

If Congress fails to act by 2033, the retirement trust fund will exhaust its reserves, leading to a shortfall in benefit payments. That will result in a 21% reduction in Social Security benefits for retirees. That would be detrimental for most retirees. Although this year's report was an improvement over last year's report, which projected a 26% reduction in benefits, the trajectory has generally been downwards, and could move further downward as more retirees begin collecting their Social Security benefits, less workers enter the labor market behind them, and inflation remains high. There is a critical need for proactive measures to safeguard financial security. Despite the looming threat, experts remain cautiously optimistic that lawmakers will implement reforms to mitigate the crisis and sustain the program's essential functions, as some bills addressing the issue have begun to appear.

Despite prevailing concerns, there exists a compelling financial incentive to delay claiming Social Security benefits. By deferring benefits until reaching full retirement age or even until age 70, individuals can secure higher monthly payments, thereby maximizing their lifetime benefits. While the temptation to claim early may stem from immediate financial needs or apprehensions about the program's future, prudent planning dictates a strategic approach to optimize long-term financial outcomes.

For individuals facing financial constraints or seeking to optimize their retirement income streams, strategic planning based on the individual's unique situation can offer viable solutions. For example, for one retiree, withdrawing funds from tax-deferred retirement accounts before mandatory distributions kick in can help manage tax liabilities and bridge income gaps while allowing Social Security benefits to accrue. That may not work for another retiree, though. On the other hand, for those with limited life expectancies or specific medical conditions, early claiming may be a prudent choice, albeit one that requires careful consideration of individual circumstances. The key is for each individual to find the right strategy for claiming Social Security benefits for themself.

• Goal Setting – The first step is to establish clear and measurable financial goals. These goals can include saving for retirement, buying a house, paying off debt, funding education, starting a business, or any other specific financial objective.
• Financial Assessment – A thorough evaluation of your current financial situation is conducted. This includes analyzing income, expenses, assets, liabilities, investments, insurance coverage, and any other relevant personal and financial information.
• Risk Analysis – An assessment of potential risks and uncertainties that may affect your financial well-being, such as health emergencies, disability, job loss, or market fluctuations, is performed. This helps determine the need for insurance or contingency plans.
• Investment Planning – Based on your goals, risk tolerance, and time horizon, an investment strategy is developed to help grow your wealth. This includes asset allocation, diversification, and selecting suitable investment vehicles like stocks, bonds, mutual funds, or real estate.
• Retirement Planning – If retirement is a goal, a plan is created to determine how much you need to save, what investment vehicles to use, and how to optimize tax advantages (i.e. retirement accounts such as 401(k), IRA, and even HSA).
• Tax Planning – Strategies are implemented to minimize tax liabilities and optimize your overall tax position in the short-term as well as over the long-term. This may involve taking advantage of deductions, tax credits, tax-efficient investments, and strategic timing of income and expenses.
• Estate Planning – If applicable, arrangements are made to manage the transfer of assets and wealth to future generations or beneficiaries in a tax-efficient manner. This includes drafting wills and/or establishing trusts with the help of an estate attorney or estate planning service, as well as naming beneficiaries for insurance policies, retirement accounts, investment accounts, and even cash accounts.
• Insurance Planning and Risk Management – Evaluating and managing various types of risk, such as insurance coverage for life, health, disability, or property, is essential to protect against unforeseen events that may negatively impact your finances.
• Regular Monitoring and Adjustments – Financial plans should be reviewed periodically to track progress, adapt to changing circumstances, and make necessary adjustments to keep the plan aligned with your goals.

In the wake of unprecedented high inflation, rising interest rates, and market volatility, 96% of investors who work with a financial advisor are satisfied with their financial advisor. That's a pretty clear overwhelming majority, according to a survey of 1,000 retail investors by Broadridge.

The same study found that although 33% of investors are familiar with robo-advisors, only 6% use a robo-advisor. Robo-advisors are frequently used by investors who want to make their own decisions with their investments, but don't want to handle the tasks of actually trading and rebalancing their portfolios.

When it comes to millennials, 65% of millennial investors currently use self-directed investing and do not work with a financial advisor. They could be completely handling their own investments themselves, or they could be utilizing a robo-advisor. Additionally, 65% of those millennial investors not already working with a financial advisor said they are likely to begin working with a human financial advisor.

With the high satisfaction of investors with their financial advisor, it's clear that investors see a high value in a human advisor when looking for a service to plan and manage their investments and tailor a financial plan and investment choices to their unique situation and needs. It's a recognition that investors know the importance of a real financial planner and having better control of when and how their money is invested.

What is driving that value and recognition?

In the survey, 53% (over half) of investors who plan to turn to human financial advisors were concerned they won’t be able to achieve their financial goals. You may have a number of goals, such as funding a college education for your children, an annual vacation, a new car, and first home purchase or vacation home purchase, retiring at a certain age, and of course being able to financially support yourself during your retirement. Those are common goals, and you may have a number of additional goals that are personal to you. A robo-advisor won't know your goals and how to invest your money to specifically help you achieve those goals. If you're not using a robo-advisor and are instead investing all on your own, you may not know how to figure out how much money you need in the future for those goals and how much to invest now to achieve those goals by a certain date. That's where a real human financial advisor can help.

Also in the survey, 46% of investors want to work with a financial advisor to reduce financial stress. That demonstrates that working with a financial advisor can help investors feel more confident about their financial goals and provide them with peace of mind. A human financial advisor can monitor your investments and how they are affecting your ability to achieve your goals, and recommend adjustments to your financial plan when necessary, so you don't have to.

A human financial advisor can offer a larger array of services, including retirement planning, insurance planning, tax planning, education savings and planning, and more, in addition to investment advice and management. With a robo-advisor, the investments are in a standard model portfolio that is used for all of their investors. The allocation of those investments may based on a projected retirement date, life expectancy, and risk tolerance. However, there are many more factors that could and should be taken into account when deciding on the appropriate investments and allocation for an investment portfolio. That includes taking into consideration other investments inside accounts that the robo-advisor doesn't have access to, including 401(k) and other employer-sponsored retirement accounts or other accounts at different financial institutions.

"Will I outlive my retirement money?" This is one of the top fears for people who are starting to prepare for their retirement years. Determining how much money you need in retirement shouldn't be a number that you pull out of thin air. It's a process that should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income and project what your income could look like each year in retirement.

The process should also consider possible factors that could affect your retirement. We all have our "blue sky" visions of the way retirement should be, yet our futures may unfold in ways we do not predict. So, as you think about your "second act," you may want to consider some life and financial factors that can suddenly arise.

This is only natural, as we all live in the present, but the future will arrive, and the future will be different than the present. The expenses you have now may not exist in retirement, and you may have new expenses in retirement that you don't experience now. The costs you have to shoulder later in retirement may exceed those at the start of retirement, especially when it comes to medical expenses and potential long-term care. As you may be retired for 20 or 30 years, or even more, it is wise to take a long-term view of things.

Medicare isn't available until you turn 65. If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost. Suppose you become disabled or seriously ill, and working is out of the question. How will you cover those medical and other expenses and make ends meet?

You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances. The medical expenses can be high, as could the cost of a caretaker if one is needed. And if you're unable to make decisions for yourself, who will make those decisions for you?

As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be tough when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future?

Unexpected issues and events that are always a possibility, but not front-of-mind, may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better.

As Social Security benefits rise about 8% for every year you delay receiving them until age 70, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments. Important factor when determining the optimal age to begin Social Security benefits include your life expectancy, other income you may be receiving, and your expenses.

Medicare will not pay for everything. Unless there's a change in how the program works, you may have a number of out-of-pocket costs, including dental and vision care. Options for covering these extra medical expenses including paying for them with money and investments or purchasing MediGap or Medicare Advantage coverage.

With advances in medicine, people can and do live longer than in the past. Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.

You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually in order to ensure you have enough assets to last through retirement. Recently, some experts have stated that number is now more like 3% or 3.5%. Whatever the right number is, some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. You may have heard of the "go-go years" in early retirement. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.

It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to specific expenses, which means the taxable or tax-advantaged account that is most appropriate as you pursue a better after-tax return for your entire portfolio.

Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors. Many people have 30-year mortgages, but there are also mortgages available for 40 years and even 50 years. It's important to plan ahead properly to know if you'll have debt in retirement, how much debt you'll have, or if there is a way to retire debt-free.

There is no financial aid program for retirement. There are no special retirement loans. Committing to pay for children's college education could make a significant impact on assets you'll have available at retirement. Parents do want to help their children pay for college, and that's great! However, it's important to consider the retirement impact and the various other options that are available, including grants and scholarships, as well as the possibility of your children paying for their own college education since they have their whole financial lives ahead of them.

Expect that retirement will have a few surprises; the absence of a strategy can leave you without guidance when those surprises happen.

These were just some of the important factors that can have a significant influence on the quality of retirement. Not paying attention to these factors and more would be a mistake. To help you avoid those mistakes, take some time to review and refine your retirement strategy. If you don't know where to begin, Strateon Intelligent Wealth has comprehensive financial planning for just that.