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5 key points to consider when planning for retirement

Now until the end of June 2021, you can get an extra 25% of your initial investment added on free. Sponsored by Leverage Planners.

Every day, an untold number of people voluntarily opt for long-term unemployment... They retire.

Thinking of retirement in those terms can help people focus on planning for their golden years, according to David Donhoff with Leverage Planners Wealth Management.

“We're basically voluntarily choosing to be unemployed for anywhere from 20 to 40 years, so we have to plan on it, we have to approach it differently than we did in our working years,” he said.

Donhoff cites five basic points to consider when planning for your retirement: vitality, longevity, vampires, heroes and immortality.

  • VITALITY: “The income we live off of -- our financial oxygen. We’ve got to make sure that we have enough to last us for the rest of our days, no matter how long we're fortunate enough to live.”
  • LONGEVITY: “The amount of income that we have accumulated to support the vitality, our spendable income.”
  • VAMPIRES: “The blood-suckers, the vampires, that’s taxes and fees, things that we could handle in our working years and we need to get rid of the drag for our retirement years.”
  • HEROES: “The heroes are our safety nets, the things that cover us in case of emergencies.”
  • IMMORTALITY: “The legalities of our trust and last will and testament, but also our legends – who we are, who are we want to proceed through us.”

Planning also needs to take into account your expenses, and Donhoff says there are three basic types: survival, emergencies and lifestyle.

  • SURVIVAL: “Our baseline living expenses, the things that never go away. It's our food, fuel, cell phones, Wi-Fi communications, the house over our head, our clothing.”
  • EMERGENCIES: “We need to plan on the unplanned. We never know when, but it's for sure gonna happen.”
  • LIFESTYLE: “The fun stuff, that's the bucket list, the travel, the spoiling the grandkids, the things that really matter.”

How you build your nest egg will change over time as well. Typically in our working years, investment portfolios should be split about 60-40 between stocks and bonds. But when you near retirement age, your investments should take on less risk and more stability.

Donhoff says there are three investment areas: the tortoise, the hare, and the snail.

  • HARE: “The stock market, stocks, bonds mutual funds, and that's where you can invest money and you can get rich, or go broke.”
  • SNAIL: “The snail is the bank, so that's the checking, savings, CDs, money market accounts. The money is protected, it's safe, generally insured by the FDIC to $250,000 per person per account, but you're not gonna make much money, especially in today's interest rates environments.”
  • TORTOISE: “These earn interest rates like bank CDs, except the interests are not fixed, they're linked to the stock market. So when the stock markets go up, without any risk of losing to the stock market, you earn gains that link to the stock market. When the markets go down, your principal is protected, zero risk of downside, and in many cases here in the state of Washington, your principal is protected and insured against loss to $500,000 per person, double the FDIC limits.”

Donhoff suggests reallocating your portfolio to more “tortoise” investments when you’re about 15 years away from retirement. And right now through mid-June, some of those tortoises are offering a 25% start-up bonus.

SPECIAL OFFER: To help you plan for retirement, Leverage Planners is offering a FREE money stress test. Call 425-223-4520 to learn more.

Sponsored by Leverage Planners. Segment Producer Joseph Suttner. Watch New Day Northwest 11 AM weekdays on KING 5 and streaming live on KING5.com. Contact New Day

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