When “anomalies” happen, we are made aware of vulnerabilities.  Recently modeled by COVID-19 and the 2021 Texas winter blast/power outage.   During these events, many wondered if they had stored enough toilet paper, or those in Houston without natural gas or a generator, will likely have convinced themselves to prepare differently in the future.

When it comes to our retirement assets, we also have some variables that we can plan for.  Understanding the following three concepts will allow you to weather most storms.

Some of the best strategies that maximize our ability to thrive in retirement and plan for legacy development include limiting exposure to eroding factors such as fees and the largest being taxes.  Where your assets sit and when you take distributions can make a dramatic difference in passing a green number to a future generation.

There are plenty of theories on glide path, asset allocation, and projections on inflation and taxation as it relates to portfolio longevity.  All important considerations, along with risk tolerance, but there is one element that often goes unnoticed.  Fees are often buried in statements, built into a product or low enough that an investor many not concern themselves until they witness time values eroding spendable dollars.  Limiting expense charges and fees inside your conservative planning allows for uninterrupted compounded growth when its a focus for you and your team.  

In Reichenstein's second principal of tax-efficient withdrawals; if the participant with a tax-deferred account has a 24 percent normal marginal tax rate, then the government owns 24% of the principal.

Different tax buckets allow for different compositions of effective planning.  On the life insurance side, often we hear advisors comment about whether someone would like to be taxed on the seed or the harvest (in an attempt for you to always select the larger amount that you reap in the harvest).  The truth lies in the details that the math works the same, until you start to spend.  There is little certainty on what personal income tax brackets will be at and during your retirement years.  Having a diversified blend of taxable, tax-deferred, and tax-free accounts is a common plan (particularly the later two) when it comes to retirement income strategies.  Distribution location is important as well as rebalancing with taxation strategy.

The most common stock tip we have all heard is to buy low and sell high.  What happens when there is a correction and you are already in a spend down?

Money without a plan, and things can get out of hand.  When assets are already depressed, leverage a less volatile holding.  Where your money is held is critical for longevity.  Take into consideration a brokerage account and your cash value life insurance.  During a market correction, selling an asset means you realize the loss instead of allowing a rebound.  Each year after a loss, extend your withdraw strategy to your conservative planning bucket to allow your equities to recover.  This method allows both accounts to function more efficiently and extend a portfolio that may have been exhausted to now fund legacy.

Whether you have found yourself in an occupation that has had a recent boom from a strange period in time, ie: tradesmen and e-commerce companies, or you have learned to adapt after taking some hits in your portfolio.  It is time to circle the wagons and assemble your team.  Designing a built-proof tax strategy, and understanding where to take distributions from can enhance your lifestyle and legacy. We recommend you get in touch with our experts to help you create a tailored plan early on before the storms of life hit.