Important steps to consider today to retire in style

This article was written for our sponsor, Collegiate Capital Management, Inc.

If you have goals for retirement but don’t have a specific plan for how to achieve them, a financial adviser can help.

"I would recommend people consider working with a trusted adviser versus winging it," said certified public accountant Liz Broadway, a partner at Hughes Pittman & Gupton, LLP. "I think being intentional is really key to success, and setting goals and having somebody who can hold you accountable to those goals will make it more likely that you'll be successful long-term."

Here are important steps your adviser can help you take when planning for retirement.

Using projection tools

A retirement projection tool will show your financial position and what to do to achieve your goals.

"Retirement projections are a useful tool for long-term planning and can be found from multiple sources," said Daniel Sigmon, Vice President of Financial Planning at Collegiate Capital Management.

Collegiate Capital’s interactive analysis tools have two facets. One shows your individual accumulation cycle during your pre-retirement years. The other shows your retirement income period in which withdrawals are being made to fund your retirement. Both sides of the equation are vital to get a true grasp of retirement goals and possibilities.

Setting goals

Once you have a comprehensive retirement plan, you will need to set goals. One goal your adviser may recommend is to create a brokerage account. Brokerage accounts allow people to invest in a variety of assets, such as mutual funds, stocks, and bonds. Brokerage accounts are also less restrictive than Individual Retirement Accounts or 401(k) accounts.

"Brokerage accounts do not have contribution caps, nor do they have premature withdrawal penalties like retirement accounts do," said Sigmon. "You can withdraw funds at your discretion at any age without penalty."

Other short-term goals may include saving a percentage of your income, investing in a Roth IRA, or setting up a health savings account.

Managing investments

Next, your adviser will help you determine the best way to invest based on your age, income, and goals.

"We select and manage the investments in your portfolio with the goal of achieving the rate of return needed to meet your retirement goals," said Sigmon.

A common question is how much to contribute.

"I always encourage people to try to do 10% of your salary," said Broadway. "Seems like a lot at first, but you start to get used to living without it. It's a good habit to be in."

From there, Sigmon encourages people to work toward investing 20% of their income.

Updating your plan

You may need to adjust your plan because of a job change, promotion, new child, or changing tax laws, such as the new 401(k) and IRA maximum contribution increase.

"We meet at regular intervals — typically at your home or office — to review your investment portfolio and discuss any changes in your life that we may need to incorporate into our planning documents and long-term projections," said Sigmon.

Investing as a young adult

As a young professional, consider investing in a Roth IRA because you’ll pay taxes now — when you likely are in a low tax bracket — and not when you withdraw.

"It won’t be subject to tax in the future, which is a great way to save while you’re a lower income earner," said Broadway.

You should choose investment options with long-term profit potential, said Sigmon. Then leave them alone to avoid the 10% tax penalty that comes from withdrawing from an IRA before age 59 1/2.

"That means that 20- to 30-year-olds have 30 to 40 years of investment time before these assets can be touched without penalty," said Sigmon. "Invest for the long term."

Investing as an older professional

As you age, your approach should change.

"Begin to reduce stock exposure and incorporate some more conservative investments, such as bonds, in preparation for your earliest years of retirement," said Sigmon. "While bonds have historically not provided the same level of returns as stocks, bond returns have generally tended to be more consistent without the same degree of price volatility for example. These characteristics are important for creating stability and liquidity in your portfolio."

If you are approaching retirement age, Broadway recommends, "maxing out 401(k) retirement plans, paying down your mortgage, and seeking to be debt free."

No matter your age, income level or retirement goals, it’s a good idea to find a trusted adviser today to ensure you can have confidence in your finances tomorrow.

This article was written for our sponsor, Collegiate Capital Management, Inc.