How Does Peninsula Wealth Help Clients Plan for Retirement?

Feb 17, 2020

Two people sit in chairs on a beach holding hands

Retirement is that all important financial goal that we work towards for the better part of our lives. However, it is also a goal for which planning can sometimes get put off or where success can feel very far off. In both of these scenarios, having a trusted partner, like Peninsula Wealth, can be invaluable.

Here is some additional insight into how we work with our clients and help them plan for retirement:

Understanding Your Retirement Goals

The first step in our retirement planning process is to get to know you and exactly what your goals are. We try to get a better understanding of your financial situation, such as information about what you have accumulated so far in retirement savings, more about your spending habits, and any liabilities that you have, as well as your earning potential between now and retirement.

Building a Comprehensive Financial Plan

Once we have this information, we can build a comprehensive financial plan to plan for your retirement income and address all of your financial related concerns:

  1. Preparing a retirement budget
  2. Offering guidance on a savings plan and maximizing tax-advantaged accounts
  3. Planning for additional healthcare expenses and long-term care. For example, how you would transition from your company retirement plan to gap coverage if pre-Medicare to Medicare?
  4. Determine how Social Security and other sources of income fit into your overall retirement income plan
  5. Develop a tax-efficient plan for managing withdrawals from retirement accounts
  6. Develop the appropriate asset allocation

Check In Regularly

Once the plan is in place, it is only the starting point.  It is even more important that we are having regular conversations to make any necessary updates or revisions to your plan, balance your short-term with your retirement goal, and to track the progress towards your goals.  To ensure your plan stays on track, there are two primary tools we use to do so.

  1. Straight-Line Appreciation Modeling – Using this method, we will apply a reasonable rate of return to project growth of your assets, add all other sources of income, including social security, and then deduct all expenses. This is done from current through death. The purpose of this analysis is to show if there are enough assets to last through retirement and projects potentially how much will be left over.
  2. Monte Carlo Analysis – This simulation will take the assets and distribution plan and run them through thousands of market scenarios, from the very good to bad. The purpose of utilizing the multiple outcomes is to provide a percentage which equates to the degree of certainty or confidence level associated with the achievement of the retirement plan.

Discuss the Non-Financial Factors of Retirement

Another way we help ready our clients for retirement is to help them consider the non-financial factors that can be equally as important in planning for a satisfying retirement. While many individuals may be prepared financially for retirement, once that day comes, they might not be prepared for transition. In a recent Harvard Business School study, many retirees said that retirement was not what they expected. People initially reported feeling like they are on vacation, and then when it starts to sink in, the feeling of “this doesn’t make me feel like I am truly living my life” starts to sink in. When this reality starts to set in, they used metaphors like “I’ve jumped off the cliff. I’ve leapt into the void.”

We have found that having conversations with clients about what they actually plan to do in retirement is extremely essential. This includes things such as:

  1. How will you establish your identity outside of work and the lack of routine?
  2. Have you thought about the activities that you will take up to fill up your day? This can mean taking up a hobby, volunteering, or finding a club or group to join.
  3. Will you be using your extra available time to travel, spend more time with family, or catch up on the projects you have been putting off?
  4. Will be staying in your current home or moving to a new place?

These are all very important questions to ask yourself as each of them can have a substantial impact on how your retirement may look.

Peninsula Wealth is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Peninsula Wealth and its representatives are properly licensed or exempt from licensure. This material is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Peninsula Wealth unless a client service agreement is in place. It is expressly understood that our firm will not provide accounting or legal advice nor prepare any accounting or legal documents for the implementation of your financial planning objectives.