Monument Resource Center

Our clients hire us because they recognize the value of our Team’s unique, straight-forward, unfiltered opinion and our tailored advice designed to answer their questions, not everyone else’s. Below, you’ll find some of the most important questions we have been asked over the years to help you better understand the role we play and the advice we give.

Early Retirement Planning: The 3 Mistakes You Should Be Avoiding

Currently, the average American predicts that they’ll be retiring at the age of 66 and 25% of them believe that they will need at least $1 million to retire early and live comfortably.

Ok, fair enough. But, here’s the thing. It’s not always about the amount of money that you have when you retire. There is no perfect “retirement calculator”. Your comfort level through retirement depends on how well you plan for it. 

Early retirement planning ensures financial freedom by balancing out your retirement expenses with your retirement income, based on your specific wants and needs. But there are pitfalls to look out for. Here are three mistakes you should avoid while early retirement planning: 

Mistake #1: Committing To Early Retirement Without Understanding The Costs

It’s important to consider costs that won’t be covered by retiring early. Like healthcare, for example. You won’t be eligible for Medicare until you reach 65 years old. And if you’re accustomed to health insurance through an employer or a company plan as a business owner, the expense of an individual or family policy on the healthcare exchange can come as a significant sticker shock. That’s why it’s crucial to factor in the cost of healthcare when considering how early to retire or the decision to sell a business. 

Think about how your spending may change as you move into retirement. Some expenses may be reduced, like commuting and other work-related costs. Other expenses may increase when you have more free time like travel, new hobbies, or enrichment activities. Often, total expenses before retirement and during retirement may be very similar, but in different areas.

Mistake #2: Having Too Many Illiquid Investments or Age-restricted Retirement Accounts 

When you’re building your wealth, you may commit to illiquid investments like Private Equity Funds, non-traded REITs, and other alternative investments that are intended to diversify exposure beyond stocks and bonds. However, these investments can come with major restrictions to accessing your capital– often for periods of five years or more. 

Be careful about what you commit to… creating cash for retirement isn’t as easy as requesting your share be liquidated. 

Similarly, be careful about which assets you plan to tap into in the early years of retirement if you’re younger than 60. 

  • Tax-deferred retirement accounts can’t be accessed without a penalty until age 59 ½ unless you meet certain exceptions, often associated with financial hardships or life events such as home purchases or paying for education. 
  • You may be able to tap into your work-sponsored retirement account before 59 ½ if you work until 55. 

Here at Monument, we believe in the elegance of simplicity when it comes to asset allocations–we wouldn’t recommend introducing illiquid investments unless they were appropriate for your unique circumstances. 

Mistake #3: Not Considering the Entirety of the Big Picture

Legacy goals and desires may change over time. If you spent your career building a profitable business or working in a high-demand executive role, you may not have exactly been focused on your estate and what’s important to you, personally. 

Before you start tapping into your assets to sustain a long retirement, be sure that you’ve thought long and hard about your personal priorities and ensured that there are sufficient assets to support your broader legacy goals (passing down wealth to the next generation, philanthropic goals, etc.).

Our well-disciplined Team here at Monument helps you visualize your whole wealth picture through a creative, customizable, and collaborative process we call Private Wealth Design. During this series of meetings, we take the time to understand your exact wants and needs, frame the risks we could see potentially happening along the way, and clarify your options so we can help set you up for a retirement you can be proud of. Early retirement planning shouldn’t be a hassle. Anything worth building is worth doing not just well, but thoughtfully, sustainably, and in a way that matters to you.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument.

Please remember that if you are a Monument client, it remains your responsibility to advise Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request.

Insurance specific:

The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short-term savings or short-term investment strategies. Generally, early surrender charges may apply during the life of the policy. Those charges may decrease the value of the policy substantially depending on how early the policy, or any portion of it, is surrendered or accessed. While a policy allows for access to the account value in the short-term, through loans and withdrawals, there are costs and risks associated with those transactions. There may be little to no account value available for loans and withdrawals.

Estate taxes may apply to insurance proceeds. Consult a financial or tax advisor about your specific financial situation.

Insurance Products are made available by unaffiliated third-party licensed insurance companies. A contract’s financial guarantees are subject to the claims-paying ability of the issuing insurance company.

Variable/Universal Life:

Variable life insurance is a complex vehicle that is subject to market risk, including the potential loss of principal invested. You should consider the investment objectives, risks, charges and expenses of the variable insurance and its underlying investment options carefully before investing. You should review the product prospectus carefully before you invest. Variable universal life insurance is permanent life insurance that offers protection and an opportunity to build cash values. You will incur mortality and expense fees and subaccount expenses and you may also incur optional rider expenses, surrender charges, and policy charges. Please Also NoteIF you are a Monument client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.