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2 Early Milestones in the Game of Retirement Life

Loren the Game of Life it came out 
in 1960. A board game that you had   in your household growing up? Most definitely we  played lot of games growing up and this is one 
of them. Okay so today what we want to do is we   want to go through the milestones of life we're 
kind of going to do it in numbers. So in a way   we're taking some liberties here the board game is 
like a series of numbers as you move through life.   And as we specifically talk about moving to and 
through retirement what we want to do is give   you strategies give you tips gives you things you 
should be talking to a retirement planner about.   And we'll have a little fun with the Game of Life
along the way. But we should first talk about how we look at every retirement whether you come 
talk with you Loren if you're 55 or 75.

We apply five guiding principles to your retirement 
to help you win the game of life. Yeah there's two   distinct phases of life there's accumulation years 
then there's the retirement years. And when it   comes to those retirement years that's when it's 
important to really start to get organized in the   form of retirement plan. And in that retirement 
plan there are five guiding principles. When   you retire you still need income your W-2 wages 
go away where's the income going to come from?   When you take income you're still going to have to 
pay taxes there's long-term care Medicare planning   legacy planning and then of course the fifth one 
is the investment planning principle.

Okay so we   have our cars this is the cutest little thing I've 
got six people in my car because I've got four   children and my husband in here. Loren has his 
daughter Jace and the little dog Coco no Mocha,   Mocha is in the car with Loren. So Loren like I 
said we're gonna have a little fun with this. Why   don't you spin once for the first time and then 
we won't spin to continue. But we'll get started   on our game. Oh two, alright Loren gets started on 
two. Would you like me to take the, goes he goes   two. And let's draw a card just fun so we can kind 
of refresh ourselves on what the cards are for the   Game of Life.

I'll draw the card, I'll answer the 
first one. Alright you go first. Ah get a pool,   I like this first card you probably like that 
Jace would like to get a pool as well. So it says   pay the bank $50,000. Wow, pools are expensive. 
Well, that sounds a lot like today's prices. So   that's the first stop or the first card that we've 
picked on the game of life.

Now the first stop on   your journey to and through retirement as we 
pull the numbers kind of on your board game   is age 50. So you're going through the game of 
life you hit age 50. What should you be thinking   about in terms of retirement? From a retirement 
planning standpoint age 50 is a milestone.   A big portion of this milestone is now you're able 
to contribute more towards your retirement savings   than what you've ever been able to do before. 
If you're under age 50 into your IRA the max   you can contribute is $6,000 but at age 50 you 
have a thousand dollar catch-up contribution.   So a total now of $7,000 but here's 
where the real fun comes into play.  At age 50 is through your employer sponsor plans 
your 401k plans. Before age 50 you could only   contribute up to $19,500 you get an extra $6,500 
contribution bonus if you will.

Once you obtain   age 50 for a total contribution of $26,000. So 
now if you're age 50 or beyond you can actually   contribute the max to your 401k plan. And if you 
qualify from an income standpoint also you can   contribute the max to your IRA. So, the 7,000 plus 
the 26.5 now you can start saving for retirement   and accumulate that wealth a lot more quicker. 
And you ever have conversations with people about   you know is it usually a no-brainer contribute 
that 6,500 or do they have to look at all the   other moving pieces in their life too. Because at 
50 I know I'll still have kids at home, a lot of   people still have kids at home so that 6,500 feels 
like a lot of money. It does feel like a lot of   money and so it's different for everybody.

In each 
one of these milestones that we talk about here on   this on this show. The outcomes or the strategies 
that you incorporate with it will be different   for everybody. And that's the necessity of a 
customized written plan as you make the transition   from the working years to the retirement years. 
Your life your circumstances your resources that   you have your cash flow is different than most 
other people. So your plan needs to be customized   to your circumstance.

Okay I have to spin I 
know I cannot spin a two that's not hard to do,   I got three okay I'm gonna take the bus here 
go with me and the four kids we got three. Alright here we go, promotion! 
Your hard work paid off spin again.   So a promotion obviously is a real piece of 
retirement and the nice thing about a promotion is   maybe you can contribute a little bit more to 
that 401k or or do a little bit more retirement   planning as those promotions come along so. Let's 
talk about our next stop on the game of life   retirement style and it's age 55. What do we need 
to know there? Age 55 is an important milestone   because now if you separate service from your 
employer and you have an employer-sponsored plan   now you have penalty free withdrawal privilege. 
And this is a very little known loophole as it   relates to these employer-sponsored plans.

if you're working with your employer you're 56   years old you retire or you get laid off or you 
just decide hey i'm going to go somewhere else   if you take your distributions from that employer 
plan you will not have to pay that 10% penalty   even though you're under age 59 and a half. So a 
lot of people think 59 and a half I take money out   of my retirement plan I'm going to be imposed 
that 10% penalty but if you take it after you   separate service post 55 from that employer plan 
you don't have that 10% penalty. And when you say   take it can you take it all at once is that the 
best strategy typically or do you want to spread   that out? Well there's a couple different things 
that goes into that.

Let's say you can take it   all once so if you have $200,000 underneath your 
employer plan your 56 you leave that employer.   You can take that full $200,000 out but if it's 
pre-tax money meaning it's never been taxed before   it's going to jump you up into a tax bracket that 
is ugly. So even though you can, you may not want.   So you can't put it in an IRA or something right 
away? You can put it into an IRA but once you do   so now that money lives underneath the IRA rules. 
Which means you cannot take it out until 59 and   a half without the 10% penalty so here's where a 
lot of the planning will come into play especially   if you want to retire prior to 59 and a half. 
Is you may choose to leave that $200,000 there   maybe you have some other IRA money that you know 
you're not going to use until post 59 and a half   or you can say between 56 and 59 and a half you're 
only going to need a 100,000 of that so many times   the employer's plan will allow you to roll the 
100,000 keep a 100,000 there and then you can   use that for the penalty free cash flow.

Thank you 
for watching this clip of retiring today and don't   forget to subscribe. If you have questions
about your retirement plan, take advantage   of the complimentary 15-minute 
retirement checkup phone call..

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