Your Wealth Distribution years begin when you decide to slow down or stop working and you transition from saving money to spending the money you have saved. Most people are simply unaware of the risks they face with their money once they start spending what they’ve saved. Let’s look at some of those risks: Taxes You may have been told not to worry about taxes because you will be in a lower tax bracket when you retire. Two questions:
  • Do you want to live at a lower level of lifestyle just because you retired?
  • What if tax rates go up and you have to send more to Uncle Sam?
Market crashes The market crashes…regularly.
  • You could lose 20% or more of your nest egg with every market crash.
  • There is no time left to recover from a market crash when you are retired.
Sequence of returns This represents how the market performs during your retirement years. If the market goes down early, you stand to lose big chunks of your savings. You could run out of money. If the market goes up early, you may be rolling in money. Do you want to take that risk? Fees and expenses It’s very expensive to hire a financial planner or investment advisor to “manage” your money. Typically you pay 1%/year to the advisor on the balance in your account. There are several other hidden fees and expenses that ratchet down your growth. The fees and expenses are deducted “from” the balance in your account; therefore, you are no longer able to earn money on that money for the rest of your life. It’s called your Lost Opportunity Cost (LOC) and the costs are staggering, especially when calculated over decades. Withdrawal rate This is the percentage of your nest egg you can withdraw each year with a 90% or 95% chance of not running out of money. What if you take 4% out of your nest egg every year and 15 years into your retirement you realize you probably should have only taken 3% or 3.5%? Conclusion If you could plan now to eliminate most or all of these risks and increase your spendable cash flow by 25% – 50%, do you even want to? Judy Carlson, CPA CEO & Founder, Coram Deo Financial

 “If what you thought to be true about your money turned out not to be true, when would you want to know?”