Blog · Retirement
Is Creating Your Own Tax-Free Pension Possible?
The nature of employment in the SF Bay Area has led to quite a bit of mobility. Start-ups come and go; and for those who want significant pay increases, they often come to those jumping to a new company. And that means forfeiting the possibility of a 20-30 year vested pension.
I know this firsthand.
Working for Lockheed Martin on space-related systems was interesting but staying current with technology as well as seeing salary growth was challenging. Getting a significant pay raise meant seeking an outside job and then getting a counteroffer. Instead of taking the counteroffer, I left the pension behind, seeking the benefits from stock options and experience in the latest tech tools and trends.
For those on a similar path, please read on, this blog is for you. If you are one of the few who have earned a wonderful pension, please enjoy it, but you probably have friends who might need my help. Or you may want to add another layer to what you have already.
Tech start-ups companies typically come with a fast-paced all-in culture with interesting technology, but also carry the risk of market downturns and flat out failure.
The dot.com bubble in 2001 presented some financial challenges for many. For me, my vested stock options helped during these turbulent economic times and later with college tuition demands. I was thankful those resources were there.
However, having used those benefits at that time meant less being reserved for retirement – a problem I later solved with a LIRP (Life Insurance Retirment Plan).
Many hard-working professionals pay little attention to retirement planning in their 30’s, 40’s and even early 50’s. Hopes are placed on 401k plans, the best of which have matching funds. If your company offers matching funds, that’s a great way to leverage your savings dollars, but not above the match.
KEY THOUGHTS – the most important part of saving for retirement is the AMOUNT of savings and the TIME your savings needs to grow with compound interest. Rate of return on retirement savings is actually less important than contributing early and often to your retirement savings. While pension plans automatically start early, those without pensions must be disciplined in their retirement savings. Don’t forget your tax-deferred accounts will be taxed!
· If you are young, start saving regularly. Creating this habit early in life is extremely important.
· If you have already begun saving, try to increase your savings by $100 / month. Review and eliminate recurring vampire-like expenses or habit-spending on things like coffee from *$.
· If you are 10-20 years from retirement and need to catch up, talk to me about using leverage to hyper-fuel your savings and create your own pension with a LIRP.
ACTION: Think about your retirement plan for a moment. Consider these questions:
· How do I know my savings will last as long as I live? (Trick question – you don’t know how long you will live!)
· Have I examined the solutions my financial professional has offered outside of IRA/401k solutions?
· What is my plan when/if savings are affected by market downturns?
· How effective is my plan in protecting my assets when health-related expenses increase?
· What if I am unable to contribute to savings due to disability?
· Will my family/spouse be provided for if I am unable to fully fund my plan?
A LIRP may help answer these questions for you. https://www.youtube.com/watch?v=Jjt3SGdeJy0
During my fast-paced career, my focus was on creating value for my company, and therefore value in the stock I was earning. Today my objective is to help clients like you create successful retirement plans.
Upon exiting my last successful startup, I took a hard look at my future plans. I came to realize I wanted peace of mind, safety of principal, and market-related growth. The answers I needed came from professionals who weren’t focused on accumulation, but on distribution, with tax-free solutions.
What questions on that list above do you have unanswered? Maybe my research will help you too? I would be honored to assist you.
If you want to know more, book a free appointment with me: https://www.calendly.com/southard/lirp
Sincerely,
Tom Southard
CDI License: 0M63258
Video resource:
LIRP - Life Insurance Retirment Plan: https://www.youtube.com/watch?v=Jjt3SGdeJy0