When it comes to preparing for your retirement, there are a lot of complicated decisions to choose from. so, how do we make sure we're making the right calls back with us today are Gary Mattson and Laurel Steward, the father daughter duo team of Mattson Financial, a full-service financial retirement firm in the Grand Rapids area. They're also popular radio show hosts.
For those that are on the verge of retirement, how big a deal is it for you to be thinking about having income? According to the financial experts, income is the basis, it’s the bread and butter of the retirement plan. So, if you're getting ready for retirement, you really need to make sure that you have an income plan in place, one that is, truly diversifying your assets so you know where you're going to start taking your income and how much. They went on to explain when they really get to those details, they actually go back to that very first meeting, looking at “What do you want to do in retirement?” Often, your dreams, goals, aspirations and your spouse’s are probably very different than what their parents had.
Social security can actually be a source of income so how do we go about maximizing those benefits? Social security is one of those things that we want to have, and it's a nice as a benefit, but also there's so many myriads of ways of taking it. Sometimes we look at it hey we're eligible so let's take it right away and don't think about the tax implications. Also, we take it now and think about when the person's left the spouse is left behind. Again, what happens during that time-frame is that not only do we have a person who leaves us and loses that income, even though we get the higher the two, in essence, then we also get a loser tax deduction. So, now we're going to be attacking retirement assets to pay out more money, which puts us at a new tax bracket. All of that comes together in a form that we want to look at call it a social security optimization report, what's best for both of you, all the way through retirement, not just starting in retirement. Mattson and Steward say it's a great base to start with, but then it has to be supplemented with other assets also.
Looking at individual retirement accounts, is there a misconception that you really need to immediately withdraw from those to fill the income gap? They went on to explain that there can be because a lot of times you know you have income sources coming in like social security, maybe you have a pension, you've got your retirement savings so you really have income coming at you through all these different streams. If you are one that you have saved majority or all of your assets and putting that into a 401k, obviously you're looking at that thinking you have to take, from a pre-tax standpoint, but there are a lot of different options out there when it comes to tax planning and looking at optimization there. Also, some strategies to see if there's something else out there that you should be doing and taking advantage of that rather than paying that 22 percent or more maybe in federal taxes plus the 4.25 percent state of Michigan, and maybe even plus your Grand Rapids city tax.
In addition to that piece you really want to look at standpoint is that “if I’m getting ready to retire”. In other words, I’m not there yet and I’m 36 months or less away or there's a possibility I might be downsizing, you really want to go into your 401k and put about 18 months of assets away in a stable value fund. So, if you do leave or forced to leave that the market conditions will not change the fact that you have income coming in without losses. So kind of that red zone thing you need to look at.They added, there's a big difference between being a good option and the right option, basically; you have to to look at it from the standpoint as fiduciaries we look at it, does it work for you today, but does it work all the way through the plan. Mattson added, so many times when we're on the radio is the fact that you're going to be in retirement 25, 30, 35 years. It’s really difficult to make a decision today that you know is going to be right 30-35 years from now. That’s why Mattson Financial has been doing this for over 30 years for their clients. They’ve been able to see some of the things that trip up other financial advisors and plans or clients and their plans, and we make sure that they uncover those things now. So, while we're bright, we're active we can make credible decisions and know how to handle those tough things when they come along the way.
How does a proper tax plan factor into a successful retirement? The experts feel this is one of those pieces, when it comes to the retirement plan, that is really missed a lot of times. Your advisor might be doing really well for you and getting those great returns and riding the markets but now what is that going to do for an income stream to you and what does that look like taxation wise so you want to make sure that you're not just taking money out. When you don't have a tax strategy in place and you're giving more money away to the government than you have to. We want to be fair and pay our taxes that are due, but why overpay because it's your hard earned money so making sure that strategies in place, talking with your advisor, and it's a very fluid plan. Your retirement plan should be flexible no matter what, but especially with tax planning, It’s going to change possibly every year with tax laws. We know something's going to change this year with the new Biden administration coming in. So just keeping an eye on that is very crucial.
Why is it important to dial back some market exposure at this stage of life? Mattson Financial experts state that “Well, let's face it, if all you have in your portfolio stocks and bonds, that's what you're going to realize what's going on.” They continued to say that so many times we have it where we're seeing the 2000,2008, 2020, when people are in retirement and those two assets go all the way down; you still need it. So, it's not just about having assets in a position of diversification, which is really good, but different strategies. So we want to pick up assets outside of just stocks and bonds, and then also different strategies because different strategies work different ways. you know, buy and hold in 2020 worked very well. But, when the market was down, maybe harvesting tax losses may have been right for one client or another client wouldn't been appropriate for. so it's making sure that plan works for that individual all the way through, and making sure you don't have tax trip ups or tax bombs there you're supposed to, and making sure you get to keep the money you're passing on to your heirs if that's your choices and what can making these calls potentially do for our retirement. It just really gives you the lifestyle hopefully that you've worked so hard for and you desire, but also being able to have these types of conversations with your advisor lets you know that you are in the know and you can take control in it's not the markets dictating what you want to do but rather, you get to dictate how your plan is going to work and that's once again coming back to, you're in the control of stress free retirement.
So for you at home, if you’d like to learn more about making the right calls for your retirement, Mattson Financial has a great offer. Right now, for the first 5 callers that have saved $250 thousand or more, that are retired or nearing retirement, they’re offering a complimentary full blown retirement plan just for you. This will allow them to sit down with you personally and provide you with a roadmap, analyzing where you are right now, and discuss your best steps to really get ready for a successful retirement. A game plan to get you where you need to be. The number to call: 616-514-3831. again, 616-514-3831.
Be sure to find them online at mattsonfinancial.com