retirement

Though the difference between retirement planning and all-inclusive financial planning may seem slim, people often plan too much for one target.

If you focus excessively on your future retirement, you might forget that you have other bills and goals before then. Obviously, the less money you spend today will mean the more money you’ll have tomorrow. But is that what life is all about? Find a balance between supporting your current lifestyle and making sure you’ll be financially secure in the future.

Your financial plan shouldn’t only focus on retirement, but should also help you develop a cash-flow model that covers the years before, including short-, medium-, and long-term goals.

Important issues to consider:

Life expectancy

Since you don’t know how long you’ll live, using a standard actuarial table gives you a starting point as an estimate, but probably shouldn’t be the actual number you use for your plan. When an IRS longevity table says, for instance, that a 70-year-old has a life expectancy of another seventeen years, this is just an average. Half of all 70-year-olds, in fact, will likely live beyond that. If your parents and grandparents lived to 100, you certainly don’t want to have a document that assumes you’ll die at 87. You need to plan in accordance with your health, genes, and lifestyle.

Social Security

With the variety of employment experiences that you may have had, such as the years you spent at home with the kids, your government pension may be significantly different from any assumed average. In fact, because of a special rule, if you receive a non-U.S. pension, your Social Security could be drastically reduced. Learn about that by clicking “Free Webinar” at www.Profile-Financial.com.

Residential real estate

What about the mortgage on your home, or the second mortgage? What about selling the property and paying tax? Real estate deals are notoriously complicated, so make sure that any plans or calculation software that you use take all of the variables into account.

For further information and advice on how to plan for retirement, download your free copy of my book The Retirement Planning Book here.

Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.

Published March 30, 2015.

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