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Smart Investing Newsletter Archive

Are you S.E.T for Retirement?

Tuesday, September 26th, 2017

According to a recent article in 401(k) Specialist, personal finances and retirement planning are top sources of stress for Americans. The transition into retirement can be nerve racking with so many variables to consider. During working years, wages allow the flexibility to recover from poor financial decisions. In retirement, bad decisions can be much more impactful since remaining funds must last the rest of your life however long that might be. Getting ready for retirement is complex, but it does not have to be stressful with the right planning. By breaking down Sources of income, Expenses, and Taxes, you can get S.E.T for retirement.

When wages cease in retirement, other sources of income must be ready to take its place. One source many people expect to receive is Social Security. There are literally thousands of ways a married couple can collect Social Security benefits that can result in differences of hundreds of thousands of dollars over their lifetime. Social Security should be a part of most people’s retirement plan, but due to the relatively low benefit amount and the questionable future of its ability to pay, other sources of income must be identified. Some have pensions or savings, and others get sold annuities. Whatever your plan, make sure you understand the details of your income strategy so you don’t have to worry about its reliability 30 years into retirement.

It's easy to plan for expenses we can predict, like a mortgage payment or food budget. It is more difficult to plan for the unexpected, like the roof caving in or a new car transmission. Nevertheless, life is full of unexpected occurrences and costs, so every retirement plan needs a way to cover them. Another expense in retirement is healthcare; a 65-year-old couple retiring today can expect to spend $275,000 in out-of-pocket health costs, not including dental or long-term care. As far as long-term care goes, costs can range over $100,000 per year for care, and it is estimated that 70% of Americans aged 65 will require some type of long-term care. That does not mean everyone needs to go buy long-term care insurance, but it does mean everyone should have a plan to handle it. All possible retirement expenses must be considered so that retirees can maintain their preferred lifestyle.

When it comes to taxes, everyone wants some magical strategy to get out of paying them. All over, advisors and financial publications boast of their secret ways to significantly reduce tax liability. Usually this leads people into buying something they don’t fully understand. It is true, some ways of handling taxes are better than others, but taxes are just one piece of the puzzle. One example is a QLAC, which is an annuity that defers a portion of required minimum distributions and results in less taxes initially. Sometimes this strategy can make sense, other times it doesn’t, but an advisor making a 5% commission on that sale might not always explain both sides equally. Before making a decision, be sure to understand all the impacts of that decision and its alternatives so you don’t miss out on dollars to save pennies in taxes.

For more information on how to get S.E.T. for retirement, contact Wilsey Asset Management at 858-546-4306 or visit

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