Retirement Planning

It’s kind of like the song said … life is a highway². If we’re allowed to use that analogy, the key to a smooth retirement is keeping enough gas in the tank, avoiding bumps in the road and packing the right map. 

First things first: do you know where your retirement money will come from? If you’re like most people, qualified-retirement plans and Social Security³, plus personal savings and investments are expected to play a role.

Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources.

At Signet, Retirement Income Planning is one of our core business focuses, alongside comprehensive financial planning, socially responsible investment management, insurance planning, review and implementation, tax planning and cash management solutions.

Everything we do is with our key fiduciary duties in mind – servicing your best interest, acting in utmost good faith, acting prudently, avoiding conflicts of interest, disclosing all material facts, and controlling investment expenses.

The professionals at Signet Strategic Wealth Management provide transparent financial advice and services for sophisticated investors committed to social change. Our great hope is to help you align your retirement investments in reflection of your personal values, and enable you to leave the legacy you desire.

Let’s explore a couple hot topics in retirement planning in 2020 – and take a look at how you might consider ESG & SRI methods in planning for your retirement.

RETIREMENT IN THE AGE OF CORONA:

It’s official. The fear has set in. And no matter if you believe COVID is here to stay, or just another flash in the pan, planning your retirement in the midst of a pandemic has probably caused you some anxiety.

There’s a temptation to view market declines and assume that your retirement plan has been permanently changed. But, as most financial planners will kindly remind you – you’ve probably already planned for this.

Many old-school financial planners used a “three-legged stool” analogy to approach retirement planning – pension, Social Security and personal savings. But in 2020, the rules have changed. Many people can no longer count on a handsome pension from a private-sector company, nor is Social Security viewed as a 100% secure bet.

Here are a couple of retirement-planning rules of thumb to re-examine, per The Washington Post¹. (Please note that these are not endorsements nor recommendations from Signet Strategic Wealth or its advisors.) 

When you sit down to consult with your LPL Financial Advisor, we’ll shed even more light on these rules of thumb – and help you determine which of these apply to you.

ESG & SRI IN RETIREMENT:
As we’ve established, Signet aims to provide transparent financial advice and services for sophisticated investors committed to social change. We believe that this shouldn’t change in retirement.

Let’s explore some recent considerations regarding ESG (Environmental, Social, Governance) and SRI (Socailly Responsible Investing) methodologies, as consumers prepare for retirement.

Interest in ESG has grown exponentially in recent years. A recent Morningstar study⁶ found that more than 70 percent of the United States population has “at least a moderate interest” in sustainable investing. And if you’re still looking ahead to retirement, your 401(k) may be one of your primary vehicles for saving.

If you believe that your company’s 401(k) doesn’t offer any ESG-rated options, it is possible to advocate for better options⁵ in your retirement plan. You’ll likely want to start by enlisting colleagues who also share your desire, and bringing your desire to human resources.

That said, if you’re preparing to be a pensioner, it pays to consult with your Signet Strategic Wealth Advisor, as the Department of Labor recently proposed regulations which focus on restricting the use of ESG investing principles within defined (DC) contribution plans. 

RETIRING THE 4% RULE:
We’ve already talked about this in another area of our blog⁴, but it’s especially relevant to note here! Building a retirement distribution strategy can be a challenge. How much can you withdraw each year, and still have enough money to last throughout retirement?

In the 1960s, a leading financial professional developed a guideline for retirement distribution called the 4% rule, analyzing the historical returns of portfolios that featured an approximate balance of 60% stocks and 40% bonds.

The study determined that retirees could withdraw 4.15% each year over 30 years, without running out of money. That became known as the 4% rule. Does the 4% rule still work?

That depends on a variety of factors. For example, if stock prices fall sharply in the early years, your odds of running out of money may increase. So, is it time to retire the 4% rule? The answer lies in your retirement goals, time horizon and risk tolerance.

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement. Call today and let’s discuss how to build your unique retirement distribution formula.

HOW SIGNET CAN HELP:
It is our mission to provide investment resources and strategies to clients and financial institutions helping them develop a greater knowledge and passion for sustainable, responsible and impact investments.

Let us help you find your mark with our experience.

SOURCES:

All investing involves risk including loss of principal. No strategy assures success or protects against loss.