Retirement Planning 101

In Estate Planning, Financial Planning, HNW client, Investing, Real estate, Traverse City by Trent Grzegorczyk

Trent Grzegorczyk – Founder of MICAPITAL

Planning for retirement can be very overwhelming if you dive into everything without a proper blueprint for success. Here is a step-by-step guide that will get you heading into the right direction for a successful retirement the first time around.

Step 1 – Set Goals

The first step to achieving anything is to set goals to determine with the outcomes are that you are trying to accomplish. If you don’t know what you are working towards, how will you know if you were successful? It’s tough to go into anything in life without an outcome in mind. Being crystal clear on the outcomes that you are striving for is critical. Some examples could be retiring by age 65, living off of $100,000 of investment income per year, or buying a vacation home to spend the winters in. Being clear on what type of lifestyle you want to be living upfront will allow you to figure out the odds of funding everything within their respected time frames.

Step 2 – Establish Rules And Guiding Principles

After determining your retirement objectives, it’s a good idea to formulate rules that will govern the financial decisions that you make during your retirement. These rules or principles will keep you on the right path and prevent you from getting off track because of rash or emotional decision making. It will also help to keep everyone involved accountable so that they stay committed to reaching the desired outcomes. You can create rules around your investment portfolio, such as keeping your total asset allocation 50% stocks, 50% bonds, and anytime that it gets out of balance by more than 5%, it’s time to re-balance. Another rule could be that your downside risk cannot by greater than 20%. This means that the most your portfolio can lose is 20%. Lastly, another common rule we use with our clients is that there needs to be X amount of tax-free income produced every year. By creating rules and guidelines you can expect your future financial decisions to be made using logic and not emotions.

Step 3 – Implement Strategy

What is the most optimal way to reach your financial goals while staying within the rules and principles that you established for your wealth? This is where it gets a bit tricky, the devil is in the details. We recommend that our clients take a very holistic approach with their wealth. Instead of focusing on investments alone, bring all of your financial pieces together in a way that is sophisticated but easy to understand and track. Maybe you have a plan in place already, and have all of the right pieces, but is your strategy being optimized? When was the last time you circled back to the strategy to see if anything needs attention? One step that you could take is to deconstruct your plan to it’s individual parts, and then figure out a way to reconstruct it in a more efficient way. This is called ‘First Principles’ thinking. We regularly use this approach with all of our clients, and ultimately it helps us get our clients much greater outcomes.

Step 4 – Execute Strategy

This is quite possibly the most difficult part of the entire financial planning process. Following through on everything that you set up on the front-end. Where most people go wrong with their retirement planning is that they start to dabble into other strategies and test other things out. We call this shinny object syndrome, jumping from one thing to the next, just because it feels good to try something new. This is a recipe for disaster, and will most likely reduce your wealth potential over time. It’s best to stick with a solid strategy for a longer period of time, making smaller changes as needed to keep everything current towards your goals.

Step 5 – Find a Mentor

Not sure how to bring all of your financial pieces together for your retirement? You should consider hiring a fiduciary financial advisor to do all of this for you. You only get one shot at getting your retirement dialed in, and a good advisor who has done this thousands of times can potentially save you lots of headaches, time and potentially money. A fiduciary advisor must act in the best interest of their clients at all times. This means that by hiring one, you know that you have someone on your team that must do everything they can to put the best strategies in place for your situation. They can also give you a piece of mind that you are on the right path. To find a fiduciary advisor near you, head over to the SmartAsset website. They can match you up with an advisor that is best for your situation.

Cheers to your financial success!

MICAPITAL is a boutique private wealth planning firm specializing in serving an exclusive group of affluent and HNW individuals and families.

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