What You Need To Know
Robert Cannon Shares Insights on How Retirement Planning Evolved

Since a decade ago, retirement planning has changed due to several factors. Besides the fact that retirees live longer,

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Robert Cannon
Robert Cannon
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Since a decade ago, retirement planning has changed due to several factors. Besides the fact that retirees live longer, they spend more money because they are more active, have higher health costs, and are often called upon to help their grandchildren financially.

Retirement planning needs to address the increasing costs for retirees. For most people, there is no guaranteed secure income from a traditional pension at retirement anymore. “In a move to encourage retirement saving, and to make it easier to save, Congress passed the SECURE Act in December 2019,” according to Robert Cannon of Cannon Wealth Solutions. “The package includes some important measures to help those working toward their retirement goals. There are many, but the package also included increasing the age for required asset withdrawals from IRAs and 401(k)s. The Act also increased the age IRA contributions can be made, and allows employees working less than 1,000 hours a year to join company 401(k)s.”

Cannon continues, “Correct planning can help every person to reach financial freedom in retirement with the least amount of effort.”

Working toward financial freedom in retirement requires planning, commitment, and using the provisions of the law to your advantage.

Timing is of the essence to retirement planning

The sooner you start saving, the faster your retirement nest egg can grow with less effort. Changes in the law ensure you can take advantage of your retirement contributions to plan for the birth and adoption of a child. The measure allows each parent a penalty-free withdrawal of up to $5,000.

Under the new law, families can also use any money left in 529 savings accounts after the graduation of a child to pay off student loans. This money can now also be used for some apprenticeship programs.

Contributing the maximum retirement savings

Matching the maximum 401(k) contributions of your employer ensures maximum savings toward retirement. The SECURE Act also raised the cap for auto-enrolment contributions into employer-sponsored retirement plans. This means you can increase the amount withheld annually until you are contributing 15% of your pay.

Small business owners (with up to 100 employees) are encouraged by the Act to start a retirement plan. The incentive is a $5,000 tax credit over 3 years. The tax credit increases by $500 if employers choose to add automatic enrollment.

Because half of Americans working in the private sector never had the option of a retirement plan before, the law now facilitates this with an open Multiple Employer Plan (MEP). From this year onward, completely unrelated employers can offer their employees access to a retirement plan. The law also facilitates any changes employers want to make to their established retirement plan by making the process much easier.

Creating a diversified portfolio

The journey toward a better retirement includes setting plans in motion that will prevent any misfortunes from catching you off guard. Some of the popular investment options include stocks, bonds, funds, and other asset classes that include gold, commodities, and increasingly, cryptocurrencies.

The right types of investment accounts can also help compound gains. Whether you decide to use a risk-free high-yield savings account, IRA, Roth IRA, or any other account, you need to be aware of the various tax liabilities on contributions and withdrawals.

Even though some people prefer managing their retirement investments personally, there are several reasons why a financial advisor can offer the best advice and secure the best growth.

The Benefits of Working with a Fiduciary Financial Planner

An accredited fiduciary financial planner has your best interests in mind when helping you create a strategy for comprehensive retirement planning. Most importantly, the goal of a financial planner is to prevent any deviations from your planned time frame. They also take tax code changes and your financial circumstances into consideration.

Besides looking at the qualifications of a financial planner, you require someone with a good track record and excellent communication skills. Their job is to watch the markets for you, ensuring you don’t have to take time out of your busy day to do this unless you want to. There will be no need for you to fret about daily market movements, volatility, or lack thereof.

Depending on your portfolio, you will need to meet up with your financial planner at least a couple of times a year to discuss any changes to your investments and your time horizons. The more up-to-date your planning strategies are the more effective they are.

Robert Cannon, AIFA® is an experienced retirement planner and financial adviser with more than three decades of experience. Besides receiving a Certificate in Financial Management from Cornell University, Cannon is an expert in building and preserving wealth.