How To Design Your Retirement Income Map With Dennis Tubbergen
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Summary:
[143] – How can we prepare for retirement with the current upward inflation trend?
In this episode, Jeremy Keil interviews Dennis Tubbergen, financial advisor, radio host of Retirement Lifestyle Advocates and consumer finance author, about designing our retirement income map. Dennis shares his explanation of how to prepare for retirement, touching on topics of inflation and deflation, post-pandemic investing, tax saving strategies, and revenue sourcing, to name a few.
Dennis discusses:
- How we can beat today’s rampant inflation
- Investing strategies for when deflation is expected
- What type of real estate helps with deflation
- What he thought post-pandemic investing would look like and how it has actually looked over the past 3 years
- What revenue sourcing is
- The biggest investing mistakes people make with their IRA or 401(k)
- Some tax-saving strategies for IRAs and 401(k)s
- And more
How To Design Your Retirement Income Map
Are you worried about how to design your retirement income map and invest for both inflation and deflation? Continue reading on as we help you prepare for retirement and maximize your income.
How Can I Beat Today’s Rampant Inflation?
Inflation is a major concern for all Americans right now, but especially for retirees because it can erode the value of their savings and reduce their purchasing power. That may not seem like that big of a deal for Americans who are actively employed, but retirees need to plan to stay ahead of inflation with other means of income.
To beat inflation, it’s important to invest in tangible assets like gold, silver, and certain types of real estate. These assets tend to hold their value during times of inflation and can provide a hedge against inflationary pressures.
How Should I Invest To Prepare For Deflation?
Deflation is another economic concern that everyone should be aware of and prepare for as they approach retirement.
To prepare for deflation, it is important to invest in assets that are likely to hold their value during times of economic contraction, like certain types of real estate. Some real estate will do very poorly, like residential and commercial real estate, but farmland is a good investment for deflation because it tends to hold its value and can provide a steady source of income.
What Does Investing Look Like Post-Pandemic?
The COVID-19 pandemic has had a huge impact on the economy and the way we invest.
Dennis Tubbergen shared that he expected the government’s response to the pandemic by stimulating the economy through increased spending, which led to massive inflation. As anticipated, we find ourselves amid a wave of inflation and expect it to continue to accelerate. He emphasizes that the current wave of inflation is likely to be temporary and that the long-term effects of high debt levels will ultimately drive deflationary pressures.
While precious metals like gold and silver have not performed as he initially expected, Dennis foresees a promising future for them. Post-pandemic, it’s important to focus on investing in sectors that are likely to grow because they’re likely to provide strong returns and can help to diversify your portfolio.
What Is Revenue Sourcing?
Revenue sourcing refers to a two-step process that involves creating a retirement income map and an allocation map to maximize retirement income. This involves knowing how much income is needed during retirement and how much money will need to be pulled out of investments.
The first step involves determining the desired or necessary income during retirement. This includes considering factors such as Social Security benefits and maximizing defined benefit pensions. Understanding the net income needed rather than focusing solely on gross income is crucial.
The second step involves building an allocation map to optimize the success of the retirement income map. This allocation map determines how much money should be allocated to safe money assets and buckets to safeguard against potential risks. It also considers allocating funds to an inflation bucket, taking into account the impact of inflation on retirement income.
By effectively designing and implementing your retirement income map, you can increase your probability of a successful financial plan in retirement.
What Are The Biggest 401(k) & IRA Mistakes To Avoid?
When it comes to 401(k)s and IRAs, there are several mistakes that retirees need to avoid. These include not contributing enough to these accounts, not taking advantage of employer matching contributions, and not diversifying investments across different asset classes. It is important to work with a financial advisor to avoid these mistakes and maximize your retirement savings.
401(k)s can often be expensive and offer limited investment options. It is crucial to assess the available asset classes and evaluate their performance during market downturns to understand the historical drawdown risk. Avoid subjecting essential retirement funds to unnecessary market risks.
It’s also important to be aware of the partnership with the IRS that comes with IRAs and 401(k)s. Consider choosing when to pay taxes to the IRS. Taking advantage of tax planning opportunities can help optimize your retirement savings.
Additionally, it is vital to understand how required minimum distributions (RMDs) impact your retirement accounts. As RMDs increase over time, it is crucial to consider the long-term effects on taxes, Medicare Part B premiums, and the taxation of Social Security benefits.
How Can I Save On My Taxes For IRAs & 401(k)s?
Tax savings strategies are an important consideration for retirees with IRAs and 401(k)s.
One strategy is to consider Roth conversions, which involve converting traditional retirement account funds into Roth accounts. By doing so, you can potentially reduce your tax liability in the long run.
Unlike traditional IRA distributions, Roth distributions are not included in the formula that determines the taxable portion of your Social Security benefits. This means that by utilizing Roth conversions, you may be able to decrease the amount of your Social Security benefits subject to taxation.
You could take advantage of our current lower tax rates by performing Roth conversions now. For instance, if you file taxes jointly as a married couple, you can have up to $364,200 in income before reaching the 24% tax bracket. However, by 2026, based on existing laws, you could enter the 25% tax bracket with approximately $90,000 in income. This significant shift in tax brackets highlights the potential tax-saving opportunity that exists today.
Apart from Roth conversions, there are other tax-saving strategies to consider to help reduce your overall taxes and maximize your retirement savings. Consulting with a financial advisor or tax professional can provide further guidance on implementing these strategies effectively.
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To learn more about designing your retirement income map, check out the resources below!
If you have any questions, feel free to contact us or our guest, Dennis Tubbergen, using the contact information provided below!
Resources:
- Retirement Roadmap by Dennis Tubbergen
- Revenue Sourcing by Dennis Tubbergen
- Free Retirement Planning Video Course: 5stepretirementplan.com
- 3 Things You Should Know Before Choosing A Financial Advisor
- 7 Questions That Could Make or Break Your Retirement
- Subscribe to Retirement Revealed on Google Podcasts
- Subscribe to Retirement Revealed on Apple Podcasts
Connect With Dennis Tubbergen:
Connect With Jeremy Keil:
- 262-333-8353
- Keil Financial Partners
- LinkedIn: Jeremy Keil
- Facebook: Jeremy Keil
- LinkedIn: Keil Financial Partners
- Book a call with Jeremy
About Our Guest:
Dennis Tubbergen is a financial advisor and consumer finance author of 7 publications and 4 best-sellers, with a radio show, Retirement Lifestyle Advocates, with over 70,000 listeners. Dennis has spent his entire career in the financial industry, advising hundreds of clients on retirement accumulation and income strategies. As a highly regarded consultant to financial advisors, he has helped more than 23,000 other financial professionals with various aspects of their financial advisory practices via his newsletter, audio programs, and coaching services. Dennis has helped found one broker-dealer, serving on the Board of Directors and then serving as President and CEO of a second broker-dealer. He has been a past President of an Investment Advisory Company and has appeared as a keynote speaker at many industry events.
Disclosures:
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Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. Keil Financial Partners and Thrivent Advisor Network, LLC are not affiliated companies. Please visit our website www.keilfp.com for important disclosures.
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