Create a Retirement Formula

Last updated on May 13th, 2019 at 02:36 pm

With many people living for 20 to 25 years or more in retirement, there’s an increased likelihood that you could outlive your retirement nest egg. According to the Wisconsin Institute of Certified Public Accountants (WICPA), the best way to ensure a financially secure retirement is to carefully manage your retirement savings and withdrawal strategies. While the right strategy for you depends on your individual circumstances, here is some general advice from the WICPA to help you get started.

Monitor Your Portfolio

To make the most of your assets, monitor your investment strategy throughout your retirement and make modifications based on the economy and your current and future income needs.

Don’t assume that because you’re retired, you should move all of your money to bonds or certificates of deposit. Most CPA financial planners agree that you need a portion of your portfolio – anywhere from 20 percent to as much as 50 percent – in stocks to offset inflation.

Of course, you should take your personal risk tolerance into consideration in determining your asset allocation.

Understand Distribution Choices

It is important to understand how and when you can take distributions from your retirement plan. To meet living expenses in the early years of retirement, it’s best to tap into non-retirement assets. This allows money in your individual retirement account (IRA), 401(k), or other qualified plan to continue to grow tax-deferred until mandatory distributions are required at age 70 1/2.

The required starting date for distribution is April 1 of the year following the year in which you reach age 70 1/2. Once you reach the required start date, be sure to take at least the minimum distribution. Failure to do so results in stiff penalties.

Since minimum distribution requirements don’t apply to Roth IRAs, it’s typically a good idea to withdraw from these accounts last. All of the growth in the Roth IRA is tax free, making this one of your most valuable retirement assets.

Determine an annual withdrawal rate

When it comes to determining how much you can safely withdraw on an annual basis from your retirement nest egg without exhausting it, there are many variables, the most important being your life expectancy. Many online calculators are available to help you predict how long you’re likely to live, but bear in mind that even the best can provide only an educated guess.

Based on historical studies, a 65-year-old with a portfolio invested 50 percent in stocks can withdraw between 4 and 5 percent annually, and the same amount (increased by a 3 percent inflation rate) in each of the succeeding years. For example, if you have a retirement portfolio of $500,000, you could withdraw approximately $22,500 the first year (4.5 percent of $500,000). In the second year, you could take $23,175 ($22,500 plus 3 percent inflation) and so on.

Many investment and fund companies offer online calculators to help you determine a safe withdrawal rate.

Consider an Immediate Annuity

For a retiree concerned about outliving his or her nest egg, an immediate annuity can mitigate this risk. With an immediate annuity, in exchange for a lump sum of money, an insurance company provides you with a guaranteed income stream with payments made monthly, quarterly or annually.

You may choose to have payments based on your lifetime, both your lifetime and that of your spouse, or for a specific number of years. Most immediate annuities are fixed, which means your payment is certain no matter what happens in the market. Annuities may not be right for everyone, but they are worth considering.

The Wisconsin Institute of Certified Public Accountants (WICPA) is a professional organization for Wisconsin CPAs, with more than 8,200 members working in public accounting, industry, government and education.

Everett Smith Group Names New CEO

Everett Smith Group Ltd. of Milwaukee announced that J. Douglas Gray is the new president and chief executive officer of the firm. Gray has more than 25 years of experience leading high-profile companies and projects. He will help the privately held investment company consider new opportunities for the future.

Anders Segerdahl, a 50-year veteran of the company, will retire as president but will remain chairman of the board for Everett Smith Group.

"We feel extremely fortunate to have Doug Gray, an experienced business professional with substantial investment and management expertise, join our team and lead our organization into the future," Segerdahl said. "Doug Gray is an extremely intelligent businessman whose leadership skills have helped transform companies in the United States and abroad. We are looking forward to Mr. Gray taking over the reins and making Everett Smith Group an even better company."

Gray’s recent experiences range from serving at the helms of companies such as CSC Index and Braydon Partners LLC, to serving as a trustee of Northwestern University. He is a director and member of the nominating committee of the Chicago Board Options Exchange. Gray has also held senior executive positions with Morgan Stanley, A.T. Kearney, Inc. and Swift Independent Corp.

The Everett Smith Group is the majority owner of Albert Trostel & Sons. Everett Smith’s operating companies include Eagle Ottawa LLC; Maysteel LLC; Trostel Ltd.; Dickten & Masch LLC; OEM Worldwide LLC; and Marshall Street Insurance Co.

Fiserv Subsidiaries Unite Platforms

Fiserv Credit Processing Services and BillMatrix, both business units of Brookfield-based Fiserv Inc., are combining their expertise to put on-demand payment services in the hands of clients who use the PLUS System to manage their credit portfolios.

The enhancement underscores Fiserv’s expanded set of overall payment capabilities. Fiserv Credit Processing Services’ billers will benefit from the on-demand payment service provided by BillMatrix.

Acquired by Fiserv in 2005, BillMatrix provides telephone and Internet-based electronic payment services that allow consumers to use a wide variety of payment methods. The biller’s customer information system is notified in real time that a payment has been completed.

"Anytime of the day, a person can go online or call an 800 number to make a payment," said Max Narro, president of Fiserv Credit Processing Services. "This is another way of continuing to help our clients put 24-hour services into their customers’ hands. BillMatrix is a key element in our go-forward strategy to secure a broader role in the payments business."

Fiserv Credit Processing Services is designing two product sets around BillMatrix services.

"This alliance will add Fiserv’s clients who use the PLUS System to the blue-chip billers that are already using our service," said Jerry Portocalis, executive vice president of sales and marketing for BillMatrix. "By aligning with Fiserv Credit Processing, we have created a structure to provide any size client they serve with a broader range of payment options."

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

No posts to display