PEORIA MAGAZINE December 2022

Life Expectancy: Male vs Female vs Joint

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

65

67

69

71

73

75

77

79 81 83

85

87

89

91 93 95

Male

Female

Joint

Chart above referenced from: https:/ www.kitces.com/blog/life-expectancy-assumptions-in-retirement-plans-singles-couples-and-survivors

PROJECT YOUR RETIREMENT EXPENSES There are several rules of thumb on how much you will need in retirement, but the best way I have found is to do a little bit of work by knowing your true budget. There may be disappearing items such as your mortgage that will be paid off, or expenses that will be short-term, such as private health insurance prior to Medicare. Most people discover that total expenses don’t change much once they retire. You may spend less on gas and clothing, but you’ll spend more on hobbies, travel, insurance and medical expenses. And don’t forget to factor in inflation. REPLACING YOUR PAYCHECK Now that you have a handle on your monthly income requirements, think of retirement income sources as a three legged stool: pension, Social Security, and your savings. Any expenses not covered by pension or Social Security need to be made up with your savings. If the amount

needed from savings is more than you have, your options are to postpone retirement, work during retirement, try to increase the earnings on your retirement assets, or to spend less during retirement. TRANSITIONING INTO RETIREMENT When the big day finally arrives, your work is not finished. You will need to manage your assets very carefully in retirement to last as long as you need them. • Review your portfolio regularly. It generally makes sense to become more conservative with your portfolio in retirement, but are you keeping up with inflation? It may make sense to continue to have a portion of your allocation in growth investments. • Spend wisely. Be careful not to overspend the first few years. Spending down your principal may mean the account won’t grow enough to carry you through the later years. • Know your options on any pension plans. Lump sum payout, single

life, joint life, and period certain all need to be considered. If you aremarried, you need to know your spouse’s choices and which one makes sense for both of you. • Do you know which assets to use first? Each person’s tax situation is different and should be reviewed for the best option. A professional advisor could save you in taxes over the long term. You are required to begin minimum distributions fromyour IRA at age 72, but starting distributions earlier might make sense from a tax standpoint, like if you’re doing Roth conversions. There is no one-size-fits-all answer when it comes to retirement income planning. A financial professional can review your personal situation, help you sort through your options, and develop a plan that's right for you.

Daryl Dagit , CFP, CRPS, CEP is the market manager and financial advisor in the Peoria office of Savant Capital Management

DECEMBER 2022 PEORIA MAGAZINE 95