Retirement policy statement

Retirement policy statement is designed to help clearly lay-out our Retirement Plans, Strategies, and the Tools which will help us over the next 30 years. It is designed to be a living document which will need to be reviewed and revised as new laws are enacted or new challenges encountered that we haven’t anticipated. There are several important goals in developing this statement:


 * 1) Provide clarity into some of the complexities of how Retirement is going to work.
 * 2) Identify key gaps in our understanding that need to be addressed over time (e.g. how to select specific assets to invest in).
 * 3) Assist my family in understanding our Retirement plans and prepare them to step in if they are needed.
 * 4) Layout strategies for dealing with unusual situations like unanticipated major expenses and severe market downturns.
 * 5) This is a written record of our intentions that can be formally reviewed and revised as needed.

= Retirement details =

= Retirement strategy =

Goals (priority order)
1.       Enter your Retirement goals in Priority Order

Financial advisor
Financial Advisor (if any) contact info

Estimated yearly expenses (start of retirement)
Adjust as necessary based on your retirement plans

Estimated irregular expenses
Adjust as necessary based on your retirement plans

Key decisions
**Watchpoints are signs that would make you reconsider a decision that has been finalized.

Cash Flow (Early Retirement):
High level description of your expected income sources, expenses and which accounts (if any) you will draw-down.

Cash Flow (Middle/Late Retirement):
High level description of your expected income sources and which accounts (if any) you will draw-down.

Asset Allocations
Asset Allocation is the process of deciding which categories of investments to own (e.g. stocks, bonds, cash), what types of investments in to make in each category. This is one of the fundamental ways of controlling how much risk we take versus how much money we hope to make on your investments.

Typically, this involves:

1.      Determining ratio of Stocks to Bonds (e.g. 50% in stocks, 40% in bonds, Cash 10%).

2.      Deciding which investments in each category to make and their ratios (e.g. 30% in Intermediate Bonds, 10% in Short Term Bonds).

3.      Periodically Re-Balancing our investments to match the target ratios

4.      Updating Asset Allocation to match a change in our risk tolerance or life events (e.g. this may change as we progress through retirement)..

''Describe your Asset Allocation at the start of retirement and how you expect it to change (if at all) as retirement progresses. Any proposed changes should align with your Investment Policy Statement.''

= Modeling: = Document the various Retirement Modeling exercises you have completed to insure you have sufficient ''funds, cash flow and mitigation strategies to insure a successful retirement. Include:''

Key Assumptions:
·      Equity Growth Rate                                     Equity Growth Standard Deviation

·      Fixed Income Rates                                      Fixed Income Standard Deviation

·      Her SS Start/Amount                                   His SS Start/Amount

·      Inflation                                                         Tax Rates

·      Expenses                                                       Etc.

Deterministic Models:
Describe the deterministic analysis (e.g. Excel spreadsheets) and key results

Probabilistic Models:
Describe the probabilistic analysis completed and key results

Evaluation Metrics:
·      Withdrawal Rate:                        (For typical retirements, should be < 4%)

·      Probability of Success:                 (For probabilistic models, should be >85%)

·      Age when Assets depleted:          (Not depleted before death

·      Excess Yearly Spend Ability         (There should be a cushion to provide)

Strategy for Handling expenses that aren’t tracking to the plan:
Describe your approach for monitoring assets, income, expenses that aren’t tracking to expectations.

= Health Insurance / Long Term Care = ''Describe plans for Health Insurance and Long-Term Care (if any). Include current thinking for Medicare plans and any other related topics.''

= Social Security = ''What is your strategy for taking Social Security? When will it start for each partner? Why this approach? What factors might make you re-consider?''

= Roth Conversions = ''Describe your plans for Roth Conversions (if any). This may be a desirable strategy if your expected Marginal Tax Bracket is lower now than what it will be after RMD requirements kick-in. Typically this will be in the Early-Retirement phase.''

What is your expected Marginal Tax Rate (Fed + State) when considering Roth Conversions.

= Required Minimum Distributions (RMDs) = Describe your plans for taking RMDs from any of your Inherited-IRA, IRA, or 401K Accounts.

What is your expected Marginal Tax Rate (Fed + State) once RMDs have begun (Middle- Late Retirement Years).

= Charitable Donations (if applicable) = One of the cornerstones of my personal beliefs is the need to help others, either through charitable.

= Estate Planning =

Trust:
What if any trusts have been setup? .

Will – Hers
Is there an recently updated will? If so where is it located?.

Will – His
Is there an recently updated will? If so where is it located?.

Estate Taxes
Expected impact (if any) of Estate Taxes based on your Retirement Modeling. Describe what changes (if any) are needed to address any issues.

= Yearly Retirement To-Do List = Update the following to match your situation.

= Important Milestones for Retirement Planning: =

= Appendix 1 - Useful Tools = Here are some tools that will be useful for managing our Retirement and Investment Portfolio.