2 Early Milestones in the Game of Retirement Life
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Loren the Game of Life it came out
in 1960. A board game that you had in your household growing up? Most definitely we played lot of games growing up and this is one
of them. Okay so today what we want to do is we want to go through the milestones of life we're
kind of going to do it in numbers. So in a way we're taking some liberties here the board game is
like a series of numbers as you move through life. And as we specifically talk about moving to and
through retirement what we want to do is give you strategies give you tips gives you things you
should be talking to a retirement planner about. And we'll have a little fun with the Game of Life
along the way. But we should first talk about how we look at every retirement whether you come
talk with you Loren if you're 55 or 75. We apply five guiding principles to your retirement
to help you win the game of life.
Yeah there's two distinct phases of life there's accumulation years
then there's the retirement years. And when it comes to those retirement years that's when it's
important to really start to get organized in the form of retirement plan. And in that retirement
plan there are five guiding principles. When you retire you still need income your W-2 wages
go away where's the income going to come from? When you take income you're still going to have to
pay taxes there's long-term care Medicare planning legacy planning and then of course the fifth one
is the investment planning principle. Okay so we have our cars this is the cutest little thing I've
got six people in my car because I've got four children and my husband in here.
Loren has his
daughter Jace and the little dog Coco no Mocha, Mocha is in the car with Loren. So Loren like I
said we're gonna have a little fun with this. Why don't you spin once for the first time and then
we won't spin to continue. But we'll get started on our game. Oh two, alright Loren gets started on
two. Would you like me to take the, goes he goes two. And let's draw a card just fun so we can kind
of refresh ourselves on what the cards are for the Game of Life. I'll draw the card, I'll answer the
first one. Alright you go first. Ah get a pool, I like this first card you probably like that
Jace would like to get a pool as well. So it says pay the bank $50,000. Wow, pools are expensive.
Well, that sounds a lot like today's prices. So that's the first stop or the first card that we've
picked on the game of life.
Now the first stop on your journey to and through retirement as we
pull the numbers kind of on your board game is age 50. So you're going through the game of
life you hit age 50. What should you be thinking about in terms of retirement? From a retirement
planning standpoint age 50 is a milestone. A big portion of this milestone is now you're able
to contribute more towards your retirement savings than what you've ever been able to do before.
If you're under age 50 into your IRA the max you can contribute is $6,000 but at age 50 you
have a thousand dollar catch-up contribution. So a total now of $7,000 but here's
where the real fun comes into play. At age 50 is through your employer sponsor plans
your 401k plans.
Before age 50 you could only contribute up to $19,500 you get an extra $6,500
contribution bonus if you will. Once you obtain age 50 for a total contribution of $26,000. So
now if you're age 50 or beyond you can actually contribute the max to your 401k plan. And if you
qualify from an income standpoint also you can contribute the max to your IRA. So, the 7,000 plus
the 26.5 now you can start saving for retirement and accumulate that wealth a lot more quicker.
And you ever have conversations with people about you know is it usually a no-brainer contribute
that 6,500 or do they have to look at all the other moving pieces in their life too. Because at
50 I know I'll still have kids at home, a lot of people still have kids at home so that 6,500 feels
like a lot of money. It does feel like a lot of money and so it's different for everybody. In each
one of these milestones that we talk about here on this on this show. The outcomes or the strategies
that you incorporate with it will be different for everybody. And that's the necessity of a
customized written plan as you make the transition from the working years to the retirement years.
Your life your circumstances your resources that you have your cash flow is different than most
other people.
So your plan needs to be customized to your circumstance. Okay I have to spin I
know I cannot spin a two that's not hard to do, I got three okay I'm gonna take the bus here
go with me and the four kids we got three. Alright here we go, promotion!
Your hard work paid off spin again. So a promotion obviously is a real piece of
retirement and the nice thing about a promotion is maybe you can contribute a little bit more to
that 401k or or do a little bit more retirement planning as those promotions come along so. Let's
talk about our next stop on the game of life retirement style and it's age 55. What do we need
to know there? Age 55 is an important milestone because now if you separate service from your
employer and you have an employer-sponsored plan now you have penalty free withdrawal privilege.
And this is a very little known loophole as it relates to these employer-sponsored plans. So,
if you're working with your employer you're 56 years old you retire or you get laid off or you
just decide hey i'm going to go somewhere else if you take your distributions from that employer
plan you will not have to pay that 10% penalty even though you're under age 59 and a half.
So a
lot of people think 59 and a half I take money out of my retirement plan I'm going to be imposed
that 10% penalty but if you take it after you separate service post 55 from that employer plan
you don't have that 10% penalty. And when you say take it can you take it all at once is that the
best strategy typically or do you want to spread that out? Well there's a couple different things
that goes into that. Let's say you can take it all once so if you have $200,000 underneath your
employer plan your 56 you leave that employer. You can take that full $200,000 out but if it's
pre-tax money meaning it's never been taxed before it's going to jump you up into a tax bracket that
is ugly.
So even though you can, you may not want. So you can't put it in an IRA or something right
away? You can put it into an IRA but once you do so now that money lives underneath the IRA rules.
Which means you cannot take it out until 59 and a half without the 10% penalty so here's where a
lot of the planning will come into play especially if you want to retire prior to 59 and a half.
Is you may choose to leave that $200,000 there maybe you have some other IRA money that you know
you're not going to use until post 59 and a half or you can say between 56 and 59 and a half you're
only going to need a 100,000 of that so many times the employer's plan will allow you to roll the
100,000 keep a 100,000 there and then you can use that for the penalty free cash flow.
Thank you
for watching this clip of retiring today and don't forget to subscribe. If you have questions
about your retirement plan, take advantage of the complimentary 15-minute
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