Jordan Mangaliman discusses the importance of building a retirement plan you can depend on
Listen to the interview on the Business Innovators Radio Network: https://businessinnovatorsradio.com/interview-with-jordan-mangaliman-fiduciary-retirement-advisor-founder-of-goldline-wealth-management-discussing-building-a-retirement-plan-you-can-depend-on/
Jordan Mangaliman to discuss the critical topic of building a dependable retirement plan. Jordan emphasized the importance of crafting a retirement plan that is not just a cookie-cutter solution but one that is tailored to individual needs and goals.
We delved into the six major risks that retirees face:
- Longevity: The increasing likelihood of living longer necessitates proper income source planning and inflation protection.
- Mortality: The impact of a partner’s premature death on retirement income and the importance of planning for such an event.
- Liquidity: The need for accessible funds to cover unexpected expenses like medical emergencies or home repairs.
- Inflation: The long-term effect of inflation on purchasing power and the necessity of growing investments to combat it.
- Market Risk: The potential for market downturns to affect retirement savings, especially in the early years of retirement.
- Taxes: The likelihood of future tax increases and the importance of tax planning, including strategies like Roth conversions.
Jordan also highlighted the importance of long-term care planning, noting that 70% of Americans will need long-term care at some point. He discussed various ways to fund long-term care, including self-insurance, traditional long-term care policies, and the increasingly popular 7702 plans that combine life insurance with long-term care benefits.
Retirement is often viewed as the culmination of a lifetime of hard work, a time to relax and enjoy the fruits of one’s labor. However, it is also a significant transition that comes with its own set of challenges and risks. As discussed in a recent podcast, crafting a robust retirement plan involves addressing six major risks that can impact financial security and overall quality of life during retirement. Understanding and planning for these risks is essential for anyone looking to navigate this complex phase of life successfully.
The first risk to consider is longevity. Advances in healthcare and living standards mean that people are living longer than ever before. For a married couple at age 60, there is a 43% chance that at least one partner will live to age 95. This statistic underscores the necessity for retirement plans to accommodate potentially lengthy lifespans. A well-structured plan must include strategies for generating sustainable income over an extended period, ensuring that retirees do not outlive their savings. This can involve a combination of income sources, such as Social Security, pensions, rental income, and investments designed to generate ongoing returns.
The second risk is mortality, specifically the premature death of a spouse or partner. The financial implications of losing a partner can be profound, particularly concerning retirement income. Typically, when one spouse passes away, the surviving partner loses at least one Social Security check, potentially leading to a significant decrease in household income. Hence, it is crucial to plan for this eventuality by considering life insurance, survivor benefits, and how to adjust the retirement budget to accommodate the loss of income.
Liquidity represents the third risk, which is often overlooked in retirement planning. Unexpected expenses can arise at any time—be it home repairs, medical emergencies, or the need for long-term care. The podcast highlighted that long-term care can cost between $8,000 to $10,000 a month, which can add up to a staggering half a million dollars over several years. To address liquidity needs, retirees should ensure that a portion of their investments is easily accessible without incurring penalties or significant losses, allowing them to respond to emergencies without derailing their long-term financial plans.
Inflation is the fourth risk that retirees must contend with. The purchasing power of money decreases over time due to inflation, which has averaged around 3.6% over the last century but can spike unexpectedly, as seen during periods of economic upheaval. To combat inflation, retirees should consider growth-oriented investments for funds not immediately needed for income. This strategy helps ensure that their purchasing power is preserved, allowing them to maintain their standard of living throughout retirement.
Market risk is the fifth risk, which is particularly pertinent for those relying on investments for retirement income. Many retirees enter retirement with substantial investments in stocks and bonds, but the risk associated with market volatility can be daunting. The podcast emphasized the importance of understanding sequence of returns risk—where a market downturn early in retirement can severely affect the sustainability of a portfolio. Retirees must evaluate their risk tolerance and adjust their investment strategies accordingly, potentially shifting to more conservative allocations to protect their principal.
