With a slumping stock market and a slowing economy, early retirees and people looking to retire in the near future need to make intelligent decisions to avoid jeopardizing a successful retirement. Here are a few actions our trusted financial planners recommend to help make the transition into retirement as seamless as possible. 

The first thing a retiree should do is examine their spending history to help build a budget. They can do this by adding up all of their annual spendings over the last three years to look at macro trends in spending patterns. Once that’s determined, they’ll want to make investments that can support that budget. 

Another way retirees can prepare for retirement income is to create a bond ladder. We’re able to help retirees invest their money while bond yields are back up and high-quality corporate rates reach as high as 4.75%¹.

High-quality bonds held to maturity can also provide a household with a steady income for the next few years. And there are a lot of different types of bonds – corporate bonds, municipal bonds, and even United States Treasuries – each with their own benefit. For example, one of the advantages of municipal bonds is the tax status since they are exempted from federal, state, and local taxes, which helps minimize taxes during retirement.

Another strategy that could be helpful during retirement is to take action to stay ahead of inflation. One way to do that is with dividend-producing stocks with a dividend range of 4-7%. Over the past 50 years, dividend income’s contribution to the total return of the S&P 500 Index averaged 40%.

Companies that grew or initiated a dividend have experienced the highest returns relative to other stocks since 1973, with a growth of $100 reaching over $14,400². Remember, these dividends are also taxed at the lower capital gains rates, not your personal income rates. 
Finally, retirees will need enough money to last for at least the next two decades or more. Using different statistical models to build a plan, we’re able to help a retiree define their sustainable withdrawal rate, including longevity risks. 

The population of people 90 and older almost tripled between 1980 and 2010 in the U.S. to 1.9 million, and it’s expected to increase significantly over the next four decades. Simply put, this means retirees may need to save for a longer retirement. Each plan we help create is unique to the client, and they should focus on two things: rate of return, and rate of withdrawal.

With so many factors coming into play that could make or break your retirement, a comprehensive financial plan created with one of our trusted financial planners can help ease your mind and create a comfortable retirement. 

Information contained herein is not tax advice and should not be considered as such. Each individual’s tax situation is unique and different. For advice related to your specific tax situation, please contact your personal tax professional. Not FDIC insured. Not bank guaranteed. May lose value.

Bonds are subject to interest rate risk. As the prevailing level of bond interest rates rise, the value of bonds already held in a portfolio declines. Portfolios that hold bonds are subject to declines and increases in value due to general changes in interest rates.  Municipal bonds may subject investors to the Alternative Minimum Tax (AMT). Municipal bonds are usually exempt from state and local taxes, though discount bonds may be subject to capital gains tax.  All investments involve the risk of potential investment losses and no strategy can assure a profit.  Dividend payments are not guaranteed by the issuing entity. The issuer can discontinue the dividend at any time."  

¹ Fixedincome.fidelity.com, CUSIP Lookup and Bond Yields, February 15, 2023
² Hartfordfunds.com, The Power of Dividends: Past, Present, and Future, September 30, 2022.