Retirement Planning Columbus Ohio

Successful retirement planning ensures that you are provided with sufficient income to support your lifestyle as long as you live. The worst-case scenario financial planners seek to prevent is their clients outliving their money. It takes careful planning of many interrelated aspects of retirement (e.g. investment accounts, retirement plans, tax consequences, social security, Medicare, estate planning, etc.) to make sure you are financially prepared. This is why it’s crucial to have a plan that is flexible enough to adapt to life changes, and durable enough to withstand unforeseen events in the financial markets.

Retirement ages vary among people. As a general rule of thumb, you are fit to retire once you have accumulated enough assets to supply you (and/or your family) with sufficient income from the point of retirement for as long as you live. Do you have enough money to support your desired standard of living during a retirement that could last 20 years or longer? There are several considerations when making this determination such as your current income & expenses versus those projected in retirement, annual inflation, annual expected investment returns, the years in which you can draw from your retirement accounts, if/when you can begin drawing your social security retirement benefits, and access to healthcare just to name a few. Your goals and desired standard of living now and in retirement will largely influence when retirement is feasible for you, specifically. Every client relationship at HFG begins with a comprehensive retirement analysis of which a financial plan is built upon and every recommendation thereafter is congruent with.

The tax-advantaged retirement account known as a 401(k) is one that many employers provide. In a typical 401(k) arrangement, you as the employee will contribute a fixed percentage of your pre-tax earned income toward your 401(k) account. Oftentimes, the employer will match a certain amount of your contributions. In a 401(k), the employee contributions are immediately vested but the employer contributions will vest over a period of several years. A 401(k) is employee-directed, meaning the employee is responsible for the investment decisions within the account. Typically, 401(k) plans will offer a handful of mutual fund options including “target-date” funds. Sometimes, a brokerage option is available within the 401(k) which allows the investor access to additional investment options such as individual stocks, bonds, mutual funds & ETFs that would otherwise not be available in the 401(k).

Earnings within the 401(k) grow tax-deferred, meaning the employee doesn’t have to pay taxes on any growth within the account until money is withdrawn from it. 401(k) plans may sometimes permit the employee to take loans from their account (which are different than withdrawals), however it’s recommended that you consult with a financial advisor prior to doing so. Withdrawals are able to be taken penalty-free after age 59.5 and are subject to ordinary income tax. If taken before age 59.5, the withdrawal will be subject to an additional 10% early withdrawal penalty unless it qualifies as a “hardship withdrawal” which may or may not be available within your plan.

401(k) plans, like other retirement accounts, will require you to take withdrawals at a certain age. The Secure 2.0 Act of 2022 delayed these required minimum distributions (RMDs) until the attainment of age 73 beginning on Jan. 1, 2023. This legislation also aims to further delay RMD commencement until age 75 beginning Jan. 1, 2033. At a certain age (typically 59.5, but sometimes sooner), the full (or partial) 401(k) balance can be “rolled over” into an IRA and maintain tax deferral. There are pros and cons to each type of account, but oftentimes clients begin their relationship with us through a rollover of their retirement plan.

It depends on the type of retirement benefits. Every person, based on their age, has a specific date they are eligible to receive 100% of their social security retirement benefits, called Full Retirement Age (FRA). Social Security can be collected as early as age 62 which would reduce the benefit, or delayed past FRA which would increase the benefit (although the benefit stops increasing at age 70). The decision to delay Social Security or to take it early can have a significant impact on your retirement plan for better or for worse and should be made with the help of a qualified financial professional. IRAs, 401(k)s, and other qualified plans allow for penalty-free withdrawals beginning after age 59.5. For more information regarding retirement planning for your specific situation, contact Harding Financial Group today.

Your retirement income can come from a number of sources, such as investment accounts, personal savings, pension plans, employer-sponsored retirement plans, Individual retirement accounts (IRAs), nonqualified plans, deferred compensation agreements, trusts, liquidation of a business or real estate, annuities, part-time employment, and in some cases life insurance policies.

Our thorough reporting quantifies your portfolio’s investment performance, net of fees, over several measurable time periods (quarterly, year-to-date, year-over-year, inception-to-date) in relation to a comparative index most closely aligned with your investment profile (e.g. Morningstar Balanced (60/40) Index, Morningstar Growth (75/25) Index, etc.) Additionally, we have performance reviews with our clients every year to recap investment performance, discuss investment strategy moving forward, and evaluate if there have been any changes in your life that would materially change your financial plan or the investment decisions we make within your portfolio.