6 Basic Retirement Rules

The following Retirement Rules will equip you with basic strategies to help you build your retirement fund.

For most people "retirement" is seen as a time during which you withdraw or cease from work. However, there is never a time in which we stop having value or influence in the lives of others.  In fact, God has created us to minister to others for a lifetime. In order to faithfully serve God in your retirement years, you must first make sure those years are funded.

Rule 1:  Save at least 10% of your income towards your Future Funded Ministry plan

This provides a simple target for you to work towards as part of a disciplined savings approach. You may start at a lower level and then focus on increasing your contributions over time to get to this percentage.

Rule 2:  Plan on living 20-25 years in retirement after age 65

People who live to age 65 have a 50% chance of living to age 85 and a 25% chance of living until 92.

Rule 3:  Plan on needing 70% to 80% of your income in your Future Funded Ministry years

Certain expenses will likely disappear or be reduced once you leave the workplace.

Rule 4:  To make your savings last, withdraw less than 4% a year

This simple formula has proven very accurate over time. It provides a guideline for how much to withdraw each year without exhausting your retirement savings.

Rule 5:  Rebalance your asset allocation at least once per year

Rebalancing is when you adjust your portfolio back to an appropriate asset allocation mix. This keeps your investments aligned with your risk tolerance and goals.

Rule 6:  Bonds percentage of your portfolio equals your age

This rule is a reminder that your portfolio needs to change as you age, becoming gradually more focused on avoiding risk and providing income.

…

For questions regarding retirement planning, contact a service specialist today!

5 Factors That May Affect Your Retirement

It’s important to understand what can affect your retirement plan. Below are five factors that you should be aware of.

Inflation

• Reduces how much you can buy today, compared to last year

• Historically, inflation averages 3% annually

• Your investments need to keep pace with or outpace inflation

Investment Risk

• Determine how much potential gain you are aiming to achieve with your investments, understanding that also means you may potentially lose a similar amount

• More risk equals more volatility in returns and account values go up and down more

• Diversify your portfolio by allocating money to multiple asset classes so you are not totally exposed if one asset type (such as stocks) drops dramatically

Healthcare and long-term care expenses

• A number of studies show that the average 65-year-old couple can expect to spend hundreds of thousands of dollars on healthcare in retirement

• The combination of increasing life expectancy and growing medical treatment costs can have a huge negative impact on savings

• Consider obtaining Long Term Care insurance

• The premiums can be significant, but having the coverage in place may help avoid disrupting your overall retirement planning strategy

Taxes

• Employer-sponsored and individual pre-tax accounts offer a variety of ways to receive tax breaks when making your retirement savings contributions

• Pre-tax contributions provide a current reduction in taxable income, and therefore a reduction in the taxes you pay each year as you are adding to your accounts

• Roth contributions are done on an after-tax basis, which does not provide a current year tax advantage but does allow you to make withdrawals on a tax-free basis in retirement

You

• Set goals for what your financial needs will be in retirement

• Evaluate your personal risk profile and asset allocation strategy

• Take full advantage of any employer matching contributions you may be eligible for

• Roll over assets from former employer plans rather than cashing out those accounts

• Seek out trusted professional guidance or use available self-help tools

---

To access more information on retirement planning, go to Envoy’s Retirement Planning Education Suite.

I’m Getting Ready to Retire. What Should I do with My Money in My Retirement Account?

Are you retired or about to retire and wondering what you should do with the funds in your retirement account? Here are a few options:

Option 1: Depending on your balance, you can keep the funds invested in your retirement plan. If you like the funds you’re investing in, it makes sense to just leave the account where it is. However, you can no longer contribute to your retirement account once you are separated from employment.

Option 2: You can rollover the funds to an IRA with Envoy Financial or another financial institution that handles IRAs. This will give you more control over your investment options and saves on taxes as rollovers are tax free until you take a distribution from the IRA.

Option 3: You can take a partial or full distribution of the account. This is one of the least desirable options. If you do this, 20% will automatically be withheld from your funds withdrawn as a prepayment of federal taxes. If you are under the age of 59.5, you may owe an additional 10% early withdrawal penalty on anything not rolled over.

If you have other questions and would like to speak with an advisor, we’d love to help lead you in the right direction.

Make sure you’re prepared for retirement. Get some valuable tips on how to make sure you’re financially prepared for retirement.