So you want to build a financial plan that will last you through retirement?. What goes into it? What makes it up? How do you put it together? That’s what we’re going to talk about in today’s show.

Before we talk about what is in a financial plan, let’s talk about what is not a financial plan. A lot of people come to us in our firm and they say, well, here’s my financial plan. Here’s my retirement blueprint. Here’s my retirement plan, and they show me a 401k statement. A 401k statement, I liken to a lumberyard. It’s part of a lumberyard. You go to a lumberyard, you find different kinds of lumber, two-by-fours, doors, windows, roof trusses. You find all kinds of things. If you’ve got an IRA, a 401k, a 403b, a 457, a Roth IRA, a pension, social security, all of those are your lumberyard, but that is not a retirement plan. To put that together and to make it a real retirement plan, you need a blueprint.

You need to find out how are you going to weave it together and address six essential things that we’re going to talk about today.

The very first thing is income. Where’s your income coming from in your financial blueprint, in your financial plan? A 401k, you can draw money out of it, an IRA or 457, you can draw money out of those things, but number one, how much income do I need in retirement? And where is that income coming from? Another question, is it guaranteed or is it going to fluctuate, just like taking a certain percentage out of your portfolio every year and trying to stay within the boundaries so that you don’t take too much out for income? Well, income pays for groceries and houses and cars, and almost all of those things are pretty non-negotiable. You have to have a certain amount coming out. That’s your budget. We think it’s really important for you to have your income solidified so you know that your income is guaranteed. It needs to be increasing. We’ll talk about that in just a minute. It needs to last as long as you do, and for those of you who are married, it needs to last as long as your spouse lasts. So all of those things, you can’t find that in a 401k, but you can only find that in a real retirement blueprint.

The second element in a real retirement plan or a retirement blueprint, you have to address inflation. Now, for 40 years, we didn’t have to because it was always 2%, 2.5%, 3% or less. In the past few years, we know in the past three years and two months, as I’m making this show right now, it’s 20 plus percent. And I just read an article recently where inflation for food, most of you who are out there, do use food in your daily activities, that’s up 25%. So over a period of a 20 or a 30 year retirement, inflation is going to eat a big hole into anything that’s fixed.

If you’ve got a pension that just pays out a fixed payout every year, or if we don’t get the kind of raises we need to get in social security, or if your plan is to just take a fixed amount out of your portfolio every single month, how’s that working for you? You’re only buying about 75% of real things this year that you were three and a half years ago. So you have to account in your plan for the impact of inflation over a 10, 15, 20, even 30 year retirement. The third thing you have to account for is your investments. Your investments when you’re 70 years old, 75 years old, probably don’t need to be in the same kind of things that they were when you were 25 or 30 years of age. You need to make sure that your investments are solid. You need to make sure that you have to continue to invest in most cases so that you can get some gain, but risk is a factor that you really need to consider.

Many people reach retirement, and we’ve seen them years after years of being in this business and being in this industry, they’ve got the money they need, but they keep it at high risk in the market the way they’ve done for 30 or 40 years to build that lumber yard, but they keep that lumber yard at risk. And ooh, a big downturn in the market just knocks their retirement portfolio down in half. Twice since the year 2000, the market has taken investments down 50%. So if you’re fully invested in the market the way you should be when you’re 25 or 30, when you’re 70, 75, or 80, you probably can’t stand roller coaster ride of the stock market in your investments. You have to address the risk level you’re going to take during your retirement in your retirement plan.

Number four, four letter word, taxes. T-A-X-E-S. Oh. It’s five. No. It’s a four letter word. My friend Ed Slott says he’s known as America’s Authority on IRAs and 401(k)s, that taxes are the single biggest factor that will separate you from your retirement dreams.

A lot of people walk into our offices and they say, you know, I have $800,000 saved for retirement. I have $1.4 million saved for retirement. And we look at it and it’s all in a 401k or it’s all in an IRA. And the really thing you need to realize is you can’t spend those dollars that are in a 401k or an IRA until they go through the grid of the US tax system. So you have a partner in your 401k. You have a partner in your IRA, unless it’s a Roth, and that partner is going to take their chunk out of it every single time you take chunk out of it. So you must consider taxes and the impact that taxes are going to have, not only on the money you take out of your IRAs and your 401(k)s. What impact are they going to have on your social security? What impact will they have on your pensions?

What impact will they have if you ever sell your house and you have to pay capital gains? Taxes are a major factor, and remember we said the 401k, the 403b, the 457, the IRAs, those are retirement accounts. Those are the lumber yard. And it couldn’t be any truer than it when it comes to the subject of taxes because none of those address taxes. Your retirement blueprint needs to address taxes.

Number five, healthcare. I want to say this the right way, and I want to say it cautiously and carefully, but we all have to get out of here. We all have to exit this life somehow and some exit it quickly and some exit it over a slow downward trend called illness sickness, and you’re going to run up a lot of healthcare costs. You need to be properly insured, first of all, but you also need to realize that there are some monumental figures that surveys have been put together to show you’re going to spend in the average healthcare cost of getting out of this life somewhere, somehow.

You’ve got to realize that’s not in my 401k, but that needs to be in your retirement plan. What kind of Medicare do you need? Do you need Medicare Advantage, which is an HMO or do you need Medicare supplement because maybe you have a few more issues? What kind of long-term care plans do you have? Am I going to cover it from my own portfolio? Am I going to buy a policy? Am I going to put it into a hybrid investment that I might be able to use for income I might be able to use for long-term care? And if I don’t use it for either, I can leave it to my children. You need to address how you’re going to pay for potential healthcare in any written retirement blueprint.

And number six is legacy. How are you going to leave it? There are ways where you can leave it, and again, the government comes in and takes a good chunk of it. There are other ways you can leave it where maybe you need a trust, maybe, I think everybody needs a will where you have your dictates for anything you live, but some of you need a trust. I don’t make those decisions. I’m not an attorney, but we refer people to attorneys who are good at understanding your situation and writing your living trust. That is a living organism almost whenever you’re gone in that it dictates how everything you have is dispersed among your children. You say, well, it just all goes to my children. Right. It still goes to your children even in a trust, but if you don’t have the trust in place, if you need one, it goes through the probate system and they take their skim off of it and they take 4, 5, 6, 7% of everything you have and it will go to your children, but only after paying all of that probate tax. It’s really important that you address your legacy and how things are going to be left when you’re gone.

So in review, a written retirement blueprint will address your income. It will address inflation. It will address investments. It will address your taxes. It will address your healthcare. And also it will address your legacy, how you leave it. If I were to pick one, which you can’t, because they’re all interrelated, that’s why it’s so difficult for you to do all of these things on your own. But if I were to pick one that was really, really important, it would be taxes because as Ed Slott says, the single biggest factor that will separate you from your dreams is taxes. So if you want to know more, we have another video. You can click the tab. It’s on taxes. It’ll go a little bit deeper into taxes, and we hope you like this. If you want our help in developing a written retirement blueprint, you can go to our website at Moseley Wealth Management, and if you found this info of value click the subscribe button, and it’ll notify you when we have future videos coming online. Thanks for checking this out.