Pillar Planning Process

Our Retirement Planning Process

Over the past 30 years, we’ve found many people have several different advisors. They might have an investment advisor or two, an insurance advisor or two, an accountant or tax preparer, and a legal attorney. Almost none of those advisors talks to the others. What do you think can happen if each advisor is doing their “own thing” without collaborating?

To solve this problem, we created our Pillar Planning Process, the six key pillars to a successful retirement.

INCOME PLANNING

This means guaranteed income for life (if needed) to:

  • Cover the basic needs in retirement.
  • Cover your desired lifestyle.
  • Have more guaranteed income than you need in retirement,
    which can give added piece of mind, no matter what the stock market is doing.
  • Provide systematic income (when lesser amounts are needed).
  • Pension type income for period certain or lifetime and survivor.

The Income Planning portion of our process is very important to help make sure your money lasts as long as you do. Income Planning should be done separately than accumulation planning, but unfortunately, we see the same aggressive planning in retirement.

Retirement planning needs to have a different approach in most cases. It isn’t the time to be aggressive, unless you have money you don’t need. You aren’t working any longer, so you have no income to replace any losses an aggressive approach may yield when the market crashes.

With some of the new options available for retirement, a safer approach may make sense.

Taking taxes into consideration can help your money last longer or increase your legacy. Tax planning is another pillar that makes a difference (see Pillar 3 – Tax Planning & Management).

We sometimes see income riders on annuities overused when a guaranteed income stream may not be needed. Many times, you don’t need to pay for the rider due to needing less money for income than the rider would pay out. These riders usually have a cost to them, although a few companies offer potential guaranteed income riders without any additional costs.

When we discuss creating any needed income, we have simple software that can help us determine if you need to use an income rider or not to achieve your goals.

ASSET PLANNING

Asset planning can mean more than just your money. It can include:

  • Planning for your home, all savings, collections, business, etc.
  • Proper ownership and titling.
  • Ownership by the proper kind of trust or corporation or entity.
  • Growth potential based on your acceptance of risk.
  • Preservation of assets, help protect principal with fair return.
  • Protection from nursing home spend down / Medicaid & veterans’ benefit look-back periods.

Asset planning includes asset protection and may include some or all of the topics above. This is a process that encompasses much more than your monetary assets.

Assets that are titled or deeded improperly can be held up in court or the probate process. There may be unnecessary fees and taxes due when you pass. Asset planning, like each of the six pillars, is a vital part of a proper estate plan.

Asset planning can avoid probate with proper beneficiary designations. If done correctly, it helps the asset pass privately to the intended heirs without a trust. Beneficiary designations override the desires of a will. It is very important to keep your beneficiary designations up to date to make sure they are what you want.

Many, if not most times, when we review beneficiary designations, we find changes need to be made due to old desires that have changed. A big omission or error we usually find could unintentionally disinherit grandchildren in some of the new cases we review. It takes us less than two minutes to share options that usually lead to a desired change — many options never offered by previous advisors and agents.

Asset planning overlaps with income planning, tax planning, healthcare planning, legacy planning, and legal planning. It all needs to be looked at together in a master plan, or many things have the potential to be missed or omitted.

TAX PLANNING & MANAGEMENT

This Includes

  • Potential reduction of taxes on income.
  • Tax-free retirement income plans.
  • Possible reduction or elimination of inheritance taxes.
  • Possible reduction or elimination of Social Security taxes.
  • Restructuring how income is taken to reduce/eliminate taxes.

Judge Learned Hand said in 1947, “There is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible.”

When you get taxes under control, you can have more income, savings can grow faster, your legacy can increase, and you can have more money for the surviving spouse to pay for healthcare or long-term care down the road.

Those who pay the most in taxes don’t spend time learning the tax code or utilizing someone who does.

Here’s an example of how taxes can devastate savings. If you double $1.00 twenty times, you’ll end up with $1,048,576. But what if you took out 28% in taxes each time? You end up with only $51,120. That is a big difference at only a 28% total tax bracket. Imagine if you could grow your money tax-deferred and take income from it tax-free!

What if I told you that inheritance taxes were optional? Proper planning can reduce or eliminate inheritance taxes, but almost no one who comes into our office has a plan for this.

HEALTH CARE PLANNING

Comprehensive health care planning includes:

  • The difference between traditional Medicare supplements vs. advantage plans.
  • A plan for how to pay for catastrophic medical expenses in retirement.
  • Leveraging money that will be used to pay for future medical expenses.
  • Education on government programs to help pay for care expenses.
  • Planning to protect assets for surviving spouse.

Health care planning is an area usually not touched by sales people or agents, since they probably don’t have much experience in real life healthcare. Health care planning helps cover your assets and gives added piece of mind knowing that much, if not all, of your health care expenses will be covered with minimal to no reduction in your savings.

Health care planning should also educate the client on options for themselves, their family, and their caregivers (which they may take from the caregiver’s own health, well-being, and finances). There are also ways for family to pay family or anyone other than a spouse.

Proper planning early enough could protect assets from the ‘spend down’ rules and potentially leave money to a surviving spouse instead of leaving them impoverished from the lack of proper planning.

Employers and Caregivers

According to a study by Metropolitan Life, approximately 26% of all employees are taking care of someone. This means that approximately 1 in 4 of your employees are considered a caregiver. They go to work, then take care of someone else (many do this every day), then go to bed and start again the next day. This can cost your company tens of thousands of dollars annually. Some get tired and need time off. Some need to quit to take care of a loved one, meaning you’ll need to hire and train a new employee, costing you plenty. We offer a team of experts to do “Ask the Expert” events or “Lunch and Learns” to help guide your employees to many resources that can help them get their lives back. Contact us for more information.

At Integrity Retirement Solutions, we have vast resources to help guide our clients through their health care needs as they age. This is yet another area that sets us apart.

LEGACY PLANNING

At Integrity Retirement Solutions, legacy planning means:

  • Optimizing your legacy for your loved ones and/or charity.
  • Keeping greedy hands out of your desired results.
  • Planning to leverage your legacy to help more with same asset/money.
  • Potentially reducing/eliminating probate and taxes, which optimizes your legacy.
  • Making sure your wants, desires, goals, and concerns are addressed.
  • Reducing strife among family after you pass.
  • Making the process easy for your loved ones.

Legacy planning can be more than giving everything to your children. Proper planning can allow you to do more with the same amount of assets.

In a great book entitled, “Splitting Heirs” by Ron Blue, he explains some great thoughts regarding what to do with what you’ve been blessed with. It may not be what you think. Ron Blue makes you think differently.

Maybe give your heirs a little something while you are still around to see how they treat it. Do they blow it, or do they invest or pay off debt? He talks about being a good steward with what we have, which includes giving it to the next best steward.

Legacy planning can include giving today through a QCD (Qualified Charitable Distribution) for those who are 70 ½ years old or older. An individual can donate up to $100,000 to a qualified charity and not include the distribution in their taxes for that year. It also counts as your required minimum distribution. There are several good reasons to do this for tax planning purposes. There are also ways to offset the gifting so your heirs don’t realize the reduction in your estate size.

You can discuss Legacy Planning with us to see if there is a plan that might fit into your desires.

Legal planning

Legal planning may be part of all the above pillars. We can work with your qualified legal counsel, or you can work with one of our pre-screened elder law attorneys who are very familiar with elder law and advanced planning.

As part of our process, your documents will be reviewed and compared to the wants, needs, desires, and goals you discussed in our discovery meetings.

The chosen legal counsel will then recommend needed changes (if any) to meet the needs to achieve your goals.

Proper documents can make or break a good plan. It is wise, from our experience, to coordinate all the parts of the plan through our Pillar Planning Process. When one person or team leader oversees all the parts, there should be less chance of missing something.

Although there is no such thing as a perfect plan, working with an experienced team can make a difference.

For more information on the Pillar Planning Process, please contact our office at 724-837-3553! We look forward to serving your needs.