Retirement Planning

Retirement planning gives you pointers towards financial independence in your old age. Whether you are a fresh graduate, a small business owner, or are approaching your retirement age, taking a proactive approach can help you live a comfortable life once you stop working. Ideally, you will want a plan that is an investment tool with rewarding returns.

At Watertree Financial Wellness, we believe retirement planning is essential and aim to help individuals with retirement income planning.

Options for Retirement Income

Most people derive their retirement income in three ways:

1. Personal Retirement Savings & Investments

These include your contributions to:

401(k) Retirement Savings Plan

Employers in the United States offer their employees a 401(k) retirement savings plan. They present their workers with several investment options within the 401(k) accounts. Then, the employee selects and makes monthly contributions toward one of the investment accounts. In turn, the employer matches part or all of the employee's contribution, enabling the employee to save up to twice their contribution. If it is a traditional 401(k) plan, it reduces the employee's taxable income and is only taxable on withdrawal. In contrast, salary deductions towards Roth 401(K) are on after-tax income, and their withdrawals are tax-free.

Watertree Financial Wellness llc
Watertree Financial Wellness llc

What Are IRA to Roth Conversions?

IRA Accounts

Individual Retirement Savings (IRA) accounts enable you to save for your retirement over a long period. They work like 401(k) retirement savings plans. Unlike the employer-sponsored 401(k), IRA accounts are self-sponsored, excluding any involvement from the employer. That way, the employee has more investment options. Still, there is no additional contribution/employer matching.

An employee can make a 401k rollover to an IRA when changing jobs. The benefits are as follows:-

  • You can diversify your investment options
  • The rollover frees you from any communication with your old employer
  • It can lower the administrative costs associated with maintaining the investment account
  • You can opt for the Roth IRA account for tax-free withdrawals
  • Take advantage of cash incentives by retirement planning services providers offering IRA accounts

Equity Savings & Taxable Brokerage Account

Equity savings and taxable brokerage accounts are ideal retirement plans for small business owners, freelancers, or independent contractors. They include investing in: -

  • Stocks
  • Tax-free bonds
  • Immediate annuities
  • Mutual funds
  • Bank fixed deposits (FDs)

2. Social Security Benefits

A person living with a disability or a qualified retiree, their spouses, children, and survivors can apply for and derive their retirement income from social security benefits. It is a comprehensive program by the federal government, issuing payments to the beneficiaries who meet the following criteria: -

  • Are a disabled person or a qualified retiree
  • Are a spouse, child, or survivor to the principal beneficiary
  • Qualify for the benefits by making contributions to the Social Security program during your working years
  • Accrue at least 40 credits with the program or based on the spouse's work history

The amount you get depends on your age when claiming the benefits, area of birth, and earning history. These are taxable amounts of up to $3,345 per month as of 2022 to the retired workers. Hence, you may have to supplement your income if you only have your social security benefits as your source of income during retirement.

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3. Pension Benefits

Like 401(k), corporations offer varying pension plans to their employees. Still, 401(k) is a defined contribution plan, and a pension is a defined benefits plan. Here, a pension provides a pre-determined payment amount to the individual upon retirement. In turn, the employer bears the investment risks that arise due to any volatility in the financial markets. For this, most employers prefer 401(k) over pension plans.

Frequently Asked Questions

As you approach your retirement age:

  • Confirm from your financial advisor the status of your retirement savings and investments. Ensure you are indeed ready for retirement.
  • Evaluate the tax implications of your upcoming retirement. Make financial decisions that minimize your tax obligations as much as possible. For example, now is the time to move houses to maximize the tax-free capital gains.
  • Diversify your mix of investments.

Set aside some cash reserves that will sustain you as you wait to make your first withdrawal. Indeed, pensions, social security, and other retirement plans can be delayed due to the necessary paperwork. Ensure you have sufficient cash in a money market account, bank savings, or a checking account to shield your living expenses for three to six months.

  • Identifying your sources of income and estimating your living expenses
  • Selecting and contributing toward a retirement investment plan
  • Managing your assets and the risks associated with them

Retirement planning allows you to invest now for financial freedom when you retire. You also enjoy cost savings, tax benefits, and other incentives as you contribute to your retirement plan.

Five Steps in Retirement Planning

There are five key steps in planning for your retirement. These are:

  1. Get your timing right
    Start saving for your financial planning retirement as early as possible. Work with a financial advisor to identify the best investment options that give you the best returns. Then, retire at a time when your passive income can cater to all your living expenses.
  2. Know your financial needs
    Estimate how much disposable income you need each month or year to live comfortably in your golden years. Anticipate any changes in your expenses, including medical needs and inflation. Ideally, you want a disposable income between 70% and 90% of your current income. The goal is to sustain your current lifestyle, even when not working.
  3. Consider your other financial goals
    For example, do you want to tour the world after retirement? Or, maybe, you want to get into philanthropic work. Whatever your goals, seek investment retirement services that accommodate these goals.
  4. Select the best retirement plan for you
    Weigh the pros and cons of all the retirement options you have. Pick a plan that suits you best. An experienced financial advisor can give you case–by–case scenarios for each choice to help you make a smart decision.
  5. Start investing in your retirement
    Set aside more funds when you are at the peak of your working career. It will cushion you when you lose your job unexpectedly or when the economy is struggling.

The amount you get depends on your age when claiming the benefits, area of birth, and earning history. These are taxable amounts of up to $3,345 per month as of 2022 to the retired workers. Hence, you may have to supplement your income if you only have your social security benefits as your source of income during retirement.

Investment Management

There is no such thing as an investment management product. It entails formulating a sound investment plan and evaluating its implementation over time to see whether the set goals are being realized. Before searching "investment management near me," you must consider several factors as follows:

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Return on Investment

Capital appreciation is the primary goal of a long-term investment strategy; however, a short-term plan may also need to provide income.

Duration of the Investment

Pension funds have a longer time horizon than other financial entities because of the deferred obligations.

Perceived Willingness to Take a Risk

Existing liabilities and the future cash flow of a corporation are essential considerations for determining the right level of risk.


Inflation Threat

An exchange rate risk exists when funds are invested in assets denominated in another currency. The fund's assets and liabilities determine the degree of this risk. For example, if the majority of Canadian business workers are located in Canada, but the pension plan is funded with US dollar assets, the company will be very vulnerable to fluctuations in the value of the two currencies.


Commodities, for example, have a low level of liquidity and may see sizeable daily price swings.

Type of Investor

It is essential to distinguish between individuals and corporations regarding financial decisions.

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Definition of Investment Management Services

Investment managers manage money or other assets that investors hold by putting cash into diverse financial instruments and other asset portfolios. Publicly traded securities (stocks) and fixed-income instruments, such as bonds, are the two most common forms of investments.

Investment management starts with a clear awareness of the customer's requirements, standards, regulations, and limits. Asset allocation techniques are continually evolving to keep up with changing market circumstances. Keeping portfolios on pace to accomplish their goals requires constant communication and oversight throughout the process. Different types of mutual funds also come into play.

Managers and Portfolio Structures

There is a lot of power in the hands of investment managers and portfolio structures. To reach a specific financial goal, investment managers take charge of assets and invest them in a manner that involves a great deal of risk. Investment managers come in numerous shapes and sizes, but their ultimate goal is the same: to put money into the market and make more money than they put in. There are a few examples here:

  • The fund manager
    The assets of a mutual fund are managed by this investment manager, who distributes them across different securities, such as stocks and bonds. They are the best for decisions concerning mutual fund investment.
  • Portfolio manager
    By investing directly or via managed products like mutual funds, ETFs, and hedge funds, a portfolio manager supports customers' money across various asset classes, such as stocks and fixed income, among others.
  • Financial advisor
    Financial advice and other services are provided to their customers by this sort of management, a financial advisor.
  • Portfolio consultant or advisory director
    Independent advice on portfolios, asset allocation techniques, and performance reporting is provided by advisory directors and portfolio consultants to different institutions.It is possible to make a direct investment in a firm or organization that is either the source of the money or the sponsor of the funds placed up for investment. Investors often pay fees to the originator/sponsor to supply funds.

    Investment managers are paid either by collecting fees based on the overall amount of money invested or by charging fees as a proportion of their profits. Investment goods, such as stocks, warrants, options, and derivatives, may also be used to reward investment managers.

Frequently Asked Questions

The types of investment management include:

  • Fund management
  • Portfolio management
  • Financial adviser management
  • What are the four types of investments?

    These include growth investments, shares, property, and defensive investments. You can get stock options explained to you by an expert before deciding.

With the aid of investment management, individuals may keep their hard-earned funds safe from being depleted over time by frivolous expenditures. It also aids in the growth of money through time to satisfy individuals' financial demands. Investment management at a company guarantees that resources are distributed correctly to meet the firm's objectives.

Portfolio managers are the people who make the big decisions about how to invest your money. Their job is to design and execute a plan of action to help clients achieve their financial objectives while keeping in mind their financial limits.

Insurance Planning

What is Insurance Planning?

Insurance planning remains pivotal in managing risks occasioned by unfortunate events. For instance, life insurance agents anticipate the probability of life-threatening events and help protect your loved ones from loss of income when an unexpected event occurs.

Insurance Planning Services

While some people view insurance as an expense, future-oriented individuals regard it as a reassurance that guarantees their peace of mind. Insurance planning services include critical components of the comprehensive plan to mitigate the potential risks around unexpected events. They encompass essential insurance strategies such as Individual life insurance, long-term care insurance, and lifetime income annuities required for proper risk management and financial success.

An experienced life insurance agent reviews your needs and recommends individualized insurance products that suit each individual's needs. Insurance planning services include the following:

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Comprehensive Review of Risk

Understand your risk exposure through a comprehensive risk review. This insurance planning service involves reviewing the existing insurance plan to ensure that the insurance aligns with your needs. Your insurance agent reviews your finances, examines areas exposed to potential risk, and provides appropriate advice and guidance to ensure these areas.

Asset Insurance

Use this insurance planning service to ensure that you do not over-insure or under-insure assets. Fortunately, your insurance partners ensure that you get the correct type of insurance according to your property value and variety.

Retirement Income

Retirement income in another insurance planning service to guarantee financial freedom upon retirement. Most people prefer annuities. However, the product varies depending on pay-out options and contributions. Your insurance partners will help you find a product that suits your retirement needs.

Death-event Security

Take a life insurance policy if you have family members whose lives depend on you being alive. Talk to a life insurance agent to help you choose a product that can suit your partner, children, or parent's budget needs upon your demise. Consider the long-term care insurance cost when selecting a life insurance policy.

Disability and Long-Term Care Protection

It is among the insurance planning services that complement employee benefits covering accidents. However, an accident may happen when you are home or commuting, and you do wish to remain exposed to financial stress if you are severely disabled.

Insuring Estate Plans

A person with real estate holdings and plenty of illiquid assets can use insurance as an effective estate planning tool. Find an estate planning checklist and estate planning near me to help you structure your insurance correctly.

Why is Insurance Planning Important?

A well-rounded financial plan includes wealth and income-building strategies as the two main pillars of success. However, a third pillar, risk management, remains essential in case of uncertainties. While most people never consider what may happen to their assets in the case of unfortunate events, it remains critical to anticipate the impact of such activities on their current lifestyle and the future living standards of their loved ones through insurance planning. Besides, insurance planning can help you identify and mitigate all the risks in every aspect of your financial life through cost-effective solutions.

Frequently Asked Questions

Insurance planning helps shield the insured and beneficiaries from unforeseen risks. It remains essential to every successful investment plan, estate plan, retirement plan, and investment. Insurance planning guarantees that you leave behind a meaningful legacy for your loved ones.

Well-thought life insurance can benefit your beneficiaries in many ways. For instance, it can cover essential expenses when you pass away. Your beneficiaries do not worry about finances such as college tuition, credit card bills, and mortgages because life insurance replaces your income.

Unless your family history includes chronic medical conditions, the most appropriate age for long-term care insurance is the mid-50s or 60s. Nobody wishes to start contributing early for an insurance policy. They can claim benefits in the 70s or 80s.

Well-structured insurance can be a great financial tool in estate planning. A life insurance plan helps you pass your immediate estate to your beneficiaries without probate complications.