Balancing Act: Managing Market Volatility in Your Washington DCP and Personal Retirement Accounts12/5/2024 As a Washington state public employee, you're building a secure financial future through your pension, the Deferred Compensation Program (DCP), and personal retirement accounts. But with the constant ebb and flow of the stock market, you might be wondering: How can I protect my retirement savings from market volatility? Let's dive into strategies to help you navigate these choppy waters and keep your retirement plans on course. Understanding Market Volatility: The Retirement Rollercoaster Market volatility is like a rollercoaster - it has its ups and downs, twists and turns. While it can be unsettling, it's a normal part of investing. Here's what you need to know:
The Washington State Deferred Compensation Program (DCP) is a voluntary supplemental retirement savings plan designed to help you build added retirement security [1]. Here's how it can help you manage market volatility: 1. Diversification Options The DCP offers a range of investment options, allowing you to spread your risk across different asset classes [2]. This diversification can help cushion your portfolio against market swings. The target date funds are also diversified. 2. Dollar-Cost Averaging By contributing to your DCP through regular payroll deductions, you're using a strategy called dollar-cost averaging [3]. This means you're buying more shares when prices are low and fewer when prices are high, potentially lowering your average cost per share over time. 3. Professional Management Options DRS offers professionally managed funds, including target date funds, which automatically adjust their asset allocation as you approach retirement [4]. This can help manage volatility without requiring constant attention from you. Personal Retirement Accounts: Your Custom Volatility Shield In addition to your DCP, you might have personal retirement accounts like IRAs or a taxable investment (brokerage) account. Here's how to manage these effectively in volatile markets: 1. Asset Allocation: Your Personal Shock Absorber Your asset allocation - the mix of stocks, bonds, and other investments - is crucial in managing volatility. Generally, the closer you are to retirement, the more conservative your allocation should be [5]. Review your asset allocation semi-annually. Rebalance to maintain your target mix. 2. Diversification: Don't Put All Your Eggs in One Basket Spread your investments across different:
3. Cash Reserves: Your Financial Cushion Having a cash reserve can prevent you from selling investments at inopportune times to meet short-term needs. Aim for 3-6 months of living expenses in easily accessible cash [7]. If you’re planning on using investment funds within the next 5-10 years consider calculating how much you will be using and move these funds into high quality, short duration bonds. Whether you're managing your DCP, IRA, or both, these strategies can help you weather market volatility: 1. Stay Invested: Time in the Market Beats Timing the Market Historically, staying invested through market cycles has been more effective than trying to time the market [8]. From 2000 to 2019, missing just the 10 best days in the market would have cut your overall return in half [9]. 2. Rebalance Regularly: Maintaining Your Risk Profile Market movements can throw your asset allocation out of balance compared to your original allocation. Regular rebalancing helps keep your desired risk level. Best Practice: Rebalance at least semi-annually or when your allocation drifts more than 25% from your target [10]. 3. Use Tax-Loss Harvesting (for Taxable Accounts) In taxable accounts, selling investments at a loss can offset capital gains and reduce your tax bill. This strategy, known as tax-loss harvesting, can turn market downturns into tax-saving opportunities [12]. The wash-sale rule prohibits claiming a loss on a security if you buy the same or a "substantially identical" security within 30 days before or after the sale [13]. 4. Use Tax-Gain Harvesting (for Taxable Accounts) In taxable accounts, selling investments at a gain will increase your tax basis (cost) and reduce future capital gains. Be aware, if your current tax rates will be lower in the future or the same, this strategy may not make sense for you. Emotional Strategies: Keeping Your Cool in Volatile Markets Managing your emotions is just as important as managing your portfolio. Here's how to stay level-headed: 1. Avoid Constant Monitoring Checking your accounts too often can lead to emotional decision-making. Limit yourself to reviewing your accounts quarterly or semi-annually. 2. Focus on Your Goals, Not Short-Term Performance Remember why you're investing in the first place - for a secure retirement, not to outperform the market. Instead of focusing on account balances, consider whether you're on track to meet your long-term goals. 3. Understand Your Risk Tolerance Your ability to stick with your investment strategy during market turbulence depends on your risk tolerance. Think about how you felt during recent market downturns. Were you worried, the market was going to zero? Or where you not concerned. Your risk tolerance can drastically shift as you get closer to retirement so be sure to re-evaluate your risk tolerance as you get closer to retirement. Special Considerations for Near-Retirees If you're within 5-10 years of retirement, market volatility can be particularly concerning. Here are some strategies to consider: 1. Gradual Shift to More Conservative Allocation Start shifting to a more conservative asset mix, but don't abandon growth investments entirely. You may need your money to last 20-30 years in retirement and inflation will be an issue during that time frame. 2. Build a Bond Ladder Consider creating a bond ladder to provide predictable income in the early years of retirement, reducing your reliance on selling stocks in a down market [15]. 3. Consider a Bucket Strategy Divide your portfolio into near-term, medium-term, and long-term buckets, each with appropriate investments for its time horizon [16]. Your Action Plan: Mastering Market Volatility Ready to take control of your retirement savings in the face of market volatility? Here's your action plan:
Sources:
-Seth Deal
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Hidden Social Security Cuts: What Washington State Public Employees Must Know About WEP and GPO11/28/2024 Did you know that over 140 different agencies in Washington State don't participate in Social Security(1)? If you're one of these public employees, you could face a shocking surprise in retirement: your Social Security benefits might be slashed by up to $587 per month in 2024 – even if your Social Security statement shows a higher amount(2). For many public servants, this hidden reduction could mean thousands of dollars in lost retirement income each year. Current Event Alert! As of the writing of this, the U.S. House of Representatives has voted with a bipartisan majority to pass the Social Security Fairness Act which would repeal WEP and GPO. The Senate still has to vote on this Act and it must also be signed into law by the President. Why Some Washington State Employees Don't Pay Into Social Security The story begins in the 1930s. When Social Security was created, many state and local governments already had pension plans for their employees. To get the Social Security Act passed, Congress allowed government agencies to opt out of the program if they maintained their own retirement plans(3). Today in Washington State:
Police Officers and Firefighters If you're in LEOFF (Law Enforcement Officers' and Fire Fighters' Retirement System):
PERS (Public Employees' Retirement System) members:
1. Windfall Elimination Provision (WEP) This provision affects your own Social Security benefits if you receive a pension from work not covered by Social Security(5). Here's how it works: The Social Security Administration applies three tests to determine your reduction:
Real-World WEP Examples: Example: James has been in the fire service for 25 years and worked various side jobs. His Social Security statement shows $1,000 monthly, but WEP reduces it to $5005. 2. Government Pension Offset (GPO) This provision affects Social Security benefits you might receive as a spouse or widow(er)(7). It's straightforward but severe:
Scenario - Full Offset: A retired firefighter receiving a $3,000 monthly pension would have their $2,000 survivor benefit completely eliminated ($3,000 × 2/3 = $2,000 reduction)(7). Legislative Updates and Reform Efforts Recent developments you should know about:
Early Career (1-10 Years)
Understanding how WEP and GPO affect your retirement requires deep knowledge of both Social Security and Washington State pension systems. As a financial advisor specializing in public employee benefits, I've seen how proper planning can help protect your retirement from these hidden benefit reductions. Sources:
-Seth DealNavigating the Public Employees Benefits Board (PEBB) Program: Healthcare Options for WA Retirees11/21/2024 As you approach retirement, you probably have a lot on your mind. But there's one thing that you shouldn't overlook: your healthcare coverage. The Public Employees Benefits Board (PEBB) Program offers a range of options for Washington state public employees. Let's dive into what PEBB offers and how to maximize your retiree healthcare benefits. Understanding PEBB: Your Retiree Healthcare Lifeline The PEBB Program isn't just for active employees. It continues to be a valuable resource for retirees, offering a variety of health plans to suit different needs and budgets. Key Point: Enrolling in PEBB retiree insurance isn't automatic. You must apply no later than 60 days after your employer-paid coverage, COBRA coverage, or continuation coverage ends. Your PEBB Healthcare Options: A Menu of Choices PEBB offers several types of plans for retirees. Let's break them down: 1. Medicare Plans (for those 65 and older) If you're eligible for Medicare, PEBB offers these options:
If you're not yet eligible for Medicare, PEBB offers:
PEBB offers dental coverage that is separate from medical plans. You have three options:
Costs: What to Expect One of the biggest concerns for retirees is healthcare costs. Here's what you need to know about PEBB retiree insurance costs:
Spouse and Dependent Coverage: Keeping Your Family Protected PEBB allows you to cover your spouse or state-registered domestic partner and dependent children. However, there are a few things to keep in mind:
What if you have other coverage options when you retire? PEBB allows you to defer (postpone) your retiree insurance. Common Deferral Reasons:
Making the Most of Your PEBB Benefits Now that you understand your options, here are some strategies to maximize your PEBB retiree benefits: 1. Plan Ahead Start thinking about your retiree healthcare needs well before you retire. Consider factors like:
Healthcare needs and plan offerings can change. During open enrollment each fall:
Most PEBB plans offer free preventive care services. Take advantage of:
4. Understand Your Prescription Coverage If you take regular medications:
Many PEBB plans offer extra perks like:
6. Consider Your Spouse's Coverage If your spouse is still working or has other coverage options:
While PEBB doesn't offer long-term care insurance, consider how you'll cover these potential costs:
Life doesn't stop when you retire. Here's how to handle some common life changes with PEBB:
Ready to make the most of your PEBB retiree benefits? Here's your action plan:
Here's to a healthy and secure retirement! -Seth DealPicture this: It's Monday morning, but instead of rushing to beat traffic, you're sipping your coffee and planning your next adventure. No more alarm clocks, no more cubicles. Sound like a dream? It doesn't have to be. As a public employee in Washington, you have a unique opportunity to make early retirement a reality. But here's the catch: Early retirement isn't just about having enough money in the bank. It's like a puzzle, and the whole picture falls apart if you're missing a piece. That's where I come in. As a financial advisor specializing in helping Washington public employees navigate their retirement options, I've seen it all. And today, I'm sharing my top strategies for bridging the gap between your dreams and your reality. The Early Retirement Puzzle Before we dive into the strategies, let's talk about the four critical pieces of the early retirement puzzle for Washington public employees:
Strategy #1: Know Your Numbers The first step is to get a clear picture of your retirement benefits. Use the DRS benefit estimator through your DRS account to see how much your pension would be at different retirement ages. Remember, knowledge is power. Don't forget to consider how different survivorship options will impact your total benefit. Strategy #2: Bridge the Social Security Gap If you retire before your full Social Security age, consider using your savings to create a "Social Security bridge." Set aside enough to replace your estimated benefit until you reach full retirement age, allowing your actual benefit to grow. The Deferred Compensation Program can be an invaluable tool in bridging the gap. Strategy #3: Don't Let Healthcare Derail Your Dreams As a retired public employee, you may be eligible for health insurance through the PEBB Program. While not cheap, it may be more affordable than marketplace options. Also consider your spouse's insurance if they're still working and maximize your HSA contributions if eligible. Strategy #4: Make Your Money Last To stretch your savings, consider a dynamic withdrawal strategy that adjusts based on market conditions and your expenses. Don't rely solely on your pension - diversify with rental income, part-time work, or dividend-paying investments. Strategy #5: Leverage Your Deferred Compensation Plan As a state employee, you have a powerful tool in your DCP. Max out your contributions leading up to retirement. If you are 50 or older, you're allowed to contribute a maximum of $30,500 ($23,000 if under 50). DCP has an advantage over other retirement accounts in that funds can be withdrawn penalty free before age 59 ½. This flexibility is incredibly important in bridging the gap to full retirement age. Strategy #6: Phase into Retirement Retirement doesn't have to be all or nothing. Phased retirement, whether part-time work or retire-rehire arrangements, can help you transition while boosting your financial security. Just be aware of the rules to avoid impacting your pension. For PERS 2 retirees, if you work less than 867 hours in a calendar year, your benefit won't be affected. You can also work for an employer not covered by a Washington state retirement system without affecting your monthly benefit unless you've been approved for a disability retirement. Strategy #7: Enjoy Your Retirement While Being Mindful Early retirement is about enjoying the freedom you've worked so hard for. While it's important to be mindful of your spending, don't forget to invest in experiences that bring you joy. Consider travel, hobbies, or quality time with loved ones. The key is finding a balance between living your best life and maintaining financial security. Strategy #8: Stay Flexible The reality is, even the best laid plans can change. Be prepared to adjust based on market conditions, health needs, or shifting priorities. Flexibility is key to a successful early retirement. Strategy #9: Plan for Taxes Your tax situation can change a lot in retirement. Consider Roth conversions in low-income years, and use your tax-advantaged accounts strategically to manage your tax bracket. Your Early Retirement Action Plan Alright, let's bring it all together. Here's your step-by-step early retirement action plan, also be sure to check out the DRS Retirement Planning Checklist:
So here's to you, to your years of dedicated public service, and to the adventure ahead. With smart planning and a little flexibility, your early retirement dreams are within reach. If you’d like to meet with me to get your questions answered in a one-on-one setting, here’s a link to request a time to meet. -Seth DealThe Shocking Truth About Long-Term Care: What Washington Public Employees Need to Know Now11/7/2024 Picture this: After decades of serving the public in Washington state, you're enjoying a well-deserved retirement. Your pension checks are steady, and life is good. Then, the unexpected happens – you need help with daily activities like bathing or getting dressed. Suddenly, your comfortable retirement savings start draining away at $8,000 per month for in-home care. Scary? Yes. But here's the good news: You can prevent this nightmare scenario with smart planning today. The Hidden Threat to Your Retirement Dreams Here's a truth that many don't realize: Your pension alone won't protect you from one of retirement's biggest expenses – long-term care. Consider these eye-opening facts:
Why Your Pension Isn't Enough (And What to Do About It) As a Washington state employee, you've got a solid pension coming. That's great! But here's what they don't tell you: Your PERS or LEOFF pension wasn't designed to handle long-term care costs. Even with careful saving, one extended health crisis could wipe out decades of retirement planning. The Real Cost of Care in Washington Let's break down what long-term care actually costs in our state:
Your Protection Options: More Than Just WA Cares You've probably heard about the WA Cares Fund. Starting July 2023, you're paying 0.58% of your salary into this program. For someone earning $60,000, that's $348 per year. But here's what you really need to know: The maximum benefit is just $36,500 (though it will increase with inflation). That would cover about three months in a nursing home at today's rates. Beyond WA Cares: Your Protection Options
To qualify for WA Cares benefits, you must meet specific criteria:
As a public employee, you have unique advantages and challenges:
The long-term care landscape in Washington is evolving and a WA Cares Fund initiative is currently being voted on. Making the Most of Your Options Remember these key strategies to maximize your long-term care protection:
Don't let long-term care costs derail your retirement dreams. Here's what to do this week:
-Seth DealAs a Washington state employee, you've dedicated your career to public service. Now, it's time to ensure your pension works just as hard for you in retirement. Many public servants wonder if their pension will be enough to support their retirement dreams. The good news? Your PERS or LEOFF pension can be a powerful foundation for your future financial security. However, you need to have additional savings beyond your pension. Understanding PERS and LEOFF: Your Pension Foundation Before we dive into optimization strategies, let's review the basics of PERS and LEOFF:
Know Your Plan: The Key to Maximizing Benefits Understanding which plan you're in is crucial, as each has unique features: PERS Plans:
7 Strategies to Optimize Your Pension Benefits Now, let's explore how to maximize the value of your pension: 1. Understand the Power of Vesting Patience can significantly increase your benefits. Most plans require 5 years of service to become vested (PERS 3 requires 10 years), but longer service can dramatically boost your pension:
2. Understand and Plan for Your "Final Average Salary" Your pension is typically based on your highest-earning consecutive 60 months. This makes your career trajectory in the years leading up to retirement particularly important. Here are some thoughtful approaches to consider:
Important Note: Always ensure that any career moves or additional responsibilities you take on align with your personal well-being and work-life balance. The highest salary isn't always worth it if it comes at the cost of your health or job satisfaction. 3. Understand the Impact of COLAs Cost of Living Adjustments (COLAs) help your pension keep pace with inflation: Most of the state pension plans offer a COLA up to 3%. It’s important to note that regardless of what inflation is, the maximum COLA is 3%. Any year that inflation is above 3%, the additional amount is applied to future adjustments. Any year that inflation is lower than 3%, the COLA can be pulled from the banked amounts from prior years. Planning Tip: When projecting your retirement budget, factor in these COLAs. They can make a significant difference in maintaining your purchasing power over a long retirement. 4. Leverage the Deferred Compensation Program (DCP) While not part of your pension, the DCP is a valuable supplemental savings plan:
5. Evaluate Survivor Benefit Options Protecting your loved ones is a crucial aspect of retirement planning. It's important to understand that choosing a survivor option will reduce your monthly benefit, but it provides ongoing payments to your survivor after your death. Here are the four options available:
7. Stay Informed About Legislative Changes Pension systems can evolve with new legislation. While existing benefits are generally protected, future accruals might be affected:
Remember, your pension is a valuable benefit, but it's just one component of your retirement plan. By understanding and optimizing your PERS or LEOFF benefits, you're taking an important step towards a secure and comfortable retirement. Consider working with a financial advisor experienced with Washington State pensions who can help you integrate your pension into a comprehensive retirement plan. -Seth DealThe Hidden Retirement Perks for Washington State Public Employees That Most Financial Advisors Miss10/24/2024 Did you know that as a Washington State public employee, you might be sitting on a gold mine of retirement benefits that even your financial advisor might have overlooked? What I'm about to share could be the key to transforming your retirement from ordinary to extraordinary. As a financial advisor and CPA who's been unraveling the complexities of public sector retirement planning, I've discovered some hidden gems in our state's system. These aren't just small perks – we're talking about strategies that could potentially add hundreds of thousands of dollars to your retirement fund. The Overlooked Powerhouse: Deferred Compensation Program (DCP) Imagine having a secret weapon in your retirement arsenal that could dramatically boost your nest egg. That's exactly what the Washington State Deferred Compensation Program (DCP) can be for you. But here's the kicker – many financial advisors don't fully leverage its potential. Why is the DCP such a game-changer? Let's break it down:
But here's where it gets really interesting. Did you know that by strategically balancing pre-tax and Roth contributions, you could set yourself up for significant tax advantages in retirement? It's a strategy many overlook, but it could make a world of difference. The DCP's Secret Weapon: Access Before Traditional Retirement Age Here's a game-changing fact that many financial advisors overlook: Unlike traditional retirement accounts, you can access your DCP funds before age 59.5 without penalties. Why is this such a big deal? Let's break it down:
This flexibility is a powerful tool in your retirement planning arsenal. It's not just about how much you save, but also about how and when you can use those savings to support your life goals. The $915,000 Question Now, you might be wondering, "Just how much of a difference can the DCP really make?" Let's crunch some numbers. Imagine this: You start contributing $750 per month at age 35. Assuming a 7% annual return, by age 65, your DCP account could grow to nearly $915,000. And that's on top of your pension! Think about what an extra $915,000 could mean for your retirement. Vacations? A dream vacation home? Financial security for you and your loved ones? The possibilities are endless. Health Insurance in Retirement: The Often Misunderstood Benefit Now, let's talk about something that keeps many soon-to-be retirees up at night: health insurance. The Public Employees Benefits Board (PEBB) Program offers retiree health insurance options that could save you a fortune. But here's the catch – many people don't fully understand how to maximize these benefits. Did you know that:
Understanding these options could be the difference between worrying about medical bills in retirement and having peace of mind to enjoy your golden years. The Leave Cash-Out Strategy: Your Hidden Treasure Here's a little-known perk that could give your retirement savings a serious boost: cashing out unused leave. Many Washington State agencies allow employees to cash out a portion of their unused vacation or sick leave upon retirement. But the real magic happens in how you use this cash-out. Imagine using it to:
It's like finding money you forgot you had – and who doesn't love that? The Return to Work Program: Having Your Cake and Eating It Too Now, for those of you who can't imagine fully slowing down, here's something that might sound too good to be true. The Return to Work program allows retirees to work up to 867 hours per year without impacting their pension benefits. Think about it: You could ease into retirement, keep your skills sharp, mentor the next generation, and supplement your income – all without touching your pension. It's the best of both worlds! Your Action Plan: Turning Insights into Reality So, you're probably wondering, "This all sounds great, but what do I do now?" Here's your roadmap to maximizing these benefits:
Remember, the key to a successful retirement isn't just in knowing these strategies exist – it's in taking action to make them work for you. The Bottom Line: Your Path to an Extraordinary Retirement As Washington State public employees, we have access to a retirement system with perks that many in the private sector would envy. By understanding and leveraging these benefits, you can transform your retirement from ordinary to extraordinary. Think about it: An extra $915,000 in your DCP, strategic health insurance planning, a significant leave cash-out, and the option to ease into retirement with part-time work. Combine all of these, and you're looking at a retirement that's not just comfortable, but truly remarkable. So, what's your next move? Will you boost your DCP contributions? Investigate your leave cash-out options? Or maybe schedule that consultation to create a comprehensive retirement strategy? Whatever you choose, take that first step today. Your future self will thank you for it. And remember, as a financial advisor specializing in Washington State public employee benefits, I'm here to help you navigate this journey. Together, we can turn your retirement dreams into reality. -Seth DealPicture this: After years of careful saving, you're finally ready to retire. You've heard about the famous 4% rule and wonder if it's your ticket to a comfortable retirement. But in today's ever-changing economic landscape, is this rule still the golden standard it once was? Washington State employees, lean in close. Your retirement journey might be more complex than you think, and understanding the 4% rule could be the key to navigating it successfully. The 4% Rule: Trusty Guide or Outdated Map? Once considered the North Star of retirement planning, the 4% rule has guided countless retirees. But like any long-standing principle, it's facing new scrutiny in our modern economic climate. Let's unpack this rule and see how it holds up today. Decoding the 4% Rule Financial advisor William Bengen introduced this concept in 1994. The idea? Withdraw 4% of your retirement savings in your first year of retirement, then adjust that amount for inflation each subsequent year. According to Bengen's research, this approach should ensure your nest egg lasts at least 30 years. It's a simple, easy-to-remember strategy. But does simplicity equal effectiveness in today's complex financial world? The 4% Rule in Today's Economic Climate
Beyond 4%: Alternative Approaches to Consider While the 4% rule remains a useful benchmark, financial experts have developed other strategies that might complement or replace it:
The Importance of Regular Review and Adjustment Regardless of which withdrawal strategy you choose, it's crucial to regularly review and adjust your approach. Here's why:
Consider reviewing your retirement income strategy annually, or whenever you experience a significant life event or notice major economic shifts. This regular check-up can help ensure your retirement plan remains aligned with your goals and circumstances. Washington State Employees: Your Unique Advantages As a Washington State employee, you have some distinct factors to consider:
Crafting Your Personalized Retirement Strategy Ready to create a retirement plan tailored to your unique situation? Consider these key factors:
The Bottom Line: Finding Your Personal Retirement Formula The 4% rule isn't obsolete, but it's not infallible either. It remains a useful starting point, a benchmark against which to measure other strategies. For Washington State employees, with your pension providing a solid foundation, you may have more flexibility in your approach. Here's the key: There's no one-size-fits-all solution. Your retirement plan should be as unique as your fingerprint. The 4% rule might work well for some, while others might benefit from a more dynamic approach. Don't leave your financial future to chance. Consider working with a financial advisor who understands the nuances of Washington State retirement systems. Together, we can create a personalized withdrawal strategy that adapts to changing markets and your evolving needs. Remember, retirement planning isn't just about maintaining your lifestyle – it's about creating the life you've always dreamed of. Whether you choose to follow the 4% rule, adapt it, or forge a completely different path, the most important thing is that your strategy aligns with your personal goals and circumstances. -Seth DealRetire or Re-wire? The Surprising Reality of Post-Retirement Work for Washington's Public Servants10/10/2024 Imagine this: After 30 years of dedicated service to the state of Washington, you're ready to trade your office chair for a beach chair. But wait – what if retirement isn't quite what you expected? What if there's another way to enjoy your golden years while still making a difference? Welcome to the crossroads faced by many Washington public employees. The decision to work after retirement isn't just about padding your bank account – it's about redefining what retirement means to you. The Great Expectation Gap Here's a truth bomb: Many of us imagine retirement as an endless vacation. But for a significant number of retirees, reality looks quite different. While 68% of workers expect to keep working in retirement, only about 31% actually do. Why? Let's dive into the realities of post-retirement work in the Evergreen State. The Washington State Retirement Landscape As a Washington public employee, you're part of a unique system. Whether you're in PERS, TRS, SERS, LEOFF, or WSPRS, your pension is a valuable asset. But did you know that returning to work could impact your benefits? Let's break it down:
Understanding these rules is crucial. Check out the exact rules of your plan at drs.wa.gov. After all, you've earned your pension – you want to make sure you're not accidentally leaving money on the table! The Pros: Why Some Washingtonians Choose to Work
The Cons: Why Some Choose to Fully Retire
Real Talk: Navigating the Decision Here's the deal: There's no one-size-fits-all answer. Your retirement should be as unique as Washington's landscape. Here are some questions to ponder:
The Re-Wire Options: Washington's Opportunities If you're leaning towards the "re-wire" option, Washington offers a smorgasbord of opportunities. According to the Washington State Employment Security Department, sectors with high demand for experienced workers include education, healthcare, and professional services. Let's explore some options:
Financial Considerations: Beyond the Paycheck If you're considering working in retirement, it's important to understand how it might affect your overall financial picture:
Staying Sharp: Lifelong Learning in Washington Whether you choose to work or not, continuing to learn and grow can be a fulfilling part of retirement. Washington offers numerous opportunities for lifelong learning:
The Bottom Line: Your Retirement, Your Rules Here's the truth: Whether you choose to retire fully or "re-wire" with post-retirement work, there's no wrong answer. The key is to make an informed decision that aligns with your goals, values, and circumstances. Remember, your years of service to Washington have earned you the right to shape this next chapter on your terms. Whether you're dreaming of sailing the Puget Sound, volunteering in your community, or taking on a new professional challenge, the choice is yours. Planning for Success: Your Next Steps
So, Washington public servants, what will it be? Will you retire or re-wire? The adventure awaits – and it's yours to define. P.S. Navigating the specifics of your pension and the implications of post-retirement work can be complex. While this information provides a starting point, it's always a good idea to consult with a financial advisor who specializes in Washington State public employee retirement. They can help you crunch the numbers and understand the specifics of your unique situation. After all, you've worked hard for your retirement – make sure you're making the most of it! -Seth DealAs Washington State employees, you have been in the ring of public service for years. Now, as retirement approaches, it's time to focus on our own financial future. Like Rocky Balboa preparing for a championship fight, understanding what you can and can't control is crucial for a winning retirement strategy. The Retirement Equation: Your Personal Training Regimen Planning for retirement is like Rocky's intense training montages. Some aspects you can control (like your diet and exercise), while others are out of your hands (like your opponent's strategy). Your mission is to focus on the areas where you can make the most impact. Factors You Can Control (Your Training Routine)
Factors You Can't Control (Your Opponent's Moves)
Your Secret Weapon: The Washington State Pension Your state pension is like having Mickey in your corner - a reliable support system for your retirement journey. It provides a stable, predictable income that adjusts for inflation, helping to offset some of the uncontrollable factors we've discussed. Assembling Your Retirement Plan
The Power of Professional Advice Navigating the retirement equation can be as complex as planning for a championship fight. A financial advisor who understands the nuances of the Washington State retirement systems can be your Mickey, helping you optimize your plan and adjust for factors outside your control12. If you want to chat with me to discuss your unique situation, click this LINK. Conclusion While you can't control every aspect of your financial future, focusing on the factors you can influence can make a significant difference. By understanding the retirement equation and taking proactive steps, you can work towards a retirement that's more "Gonna Fly Now" triumph than "Defeat in Moscow." Remember, the best retirement plan is one that's personalized to your unique situation. Take the time to understand your options, make informed decisions, and seek professional advice when needed. Your future self will thank you for going the distance today. Want to learn more about optimizing your Washington State retirement benefits? Check out our free guides: https://www.lifefocusadvisors.com/pers.html https://www.lifefocusadvisors.com/ff.html https://www.lifefocusadvisors.com/po.html https://www.lifefocusadvisors.com/dcp.html Sources [1] Pfau, W. D. (2023). Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement. Retirement Researcher Media. [2] Benartzi, S., & Thaler, R. H. (2013). Behavioral Economics and the Retirement Savings Crisis. Science, 339(6124), 1152-1153. [3] Munnell, A. H., & Sass, S. A. (2009). Working Longer: The Solution to the Retirement Income Challenge. Brookings Institution Press. [4] Blanchett, D. M. (2014). Exploring the Retirement Consumption Puzzle. Journal of Financial Planning, 27(5), 34-42. [5] Ameriks, J., & Zeldes, S. P. (2004). How Do Household Portfolio Shares Vary with Age? Working Paper, Columbia University. [6] Markowitz, H. (1952). Portfolio Selection. The Journal of Finance, 7(1), 77-91. [7] U.S. Bureau of Labor Statistics. (2024). Consumer Price Index. [8] Social Security Administration. (2024). Retirement & Survivors Benefits: Life Expectancy Calculator. [9] Fidelity. (2023). How to plan for rising health care costs. [10] Washington State Department of Retirement Systems. (2024). Plan Information. [11] Bodie, Z., Treussard, J., & Willen, P. (2007). The Theory of Life-Cycle Saving and Investing. FRB of Boston Public Policy Discussion Paper No. 07-3. [12] Blanchett, D., & Kaplan, P. (2013). Alpha, Beta, and Now... Gamma. The Journal of Retirement, 1(2), 29-45. -Seth Deal |
AuthorsBob Deal is a CPA with over 30 years of experience and been a financial planner for 25 years. Archives
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