Our 8-step retirement planning process
1) Set your retirement goals.
Do you enjoy your job and will likely retire at the “normal” retirement age of say 65? Or are you tired of working and would like to retire as early as possible?
2) Get the baseline.
How much have you saved so far in your 401(k)? How much are you currently contributing to your retirement accounts? Do you have an old 401(k) floating around somewhere?
We will collate and examine your existing retirement accounts. As a client, you will also get access to our financial planning software so you can see all your retirement assets in one place, and watch them grow.
3) Run retirement projections.
We will run a retirement projection to see how much you’re on track, assuming you don’t make any changes.
In order to improve your retirement picture, we will then give recommendations on asset location, asset allocation, and retirement savings rate contributions.
4) Give recommendations on Asset Location
Many forget this key important step. Asset Location refers to what type of retirement vehicle is best for you to save for retirement. It is a key factor in lowering your tax burden and how much of your wealth you get to keep.
Should you contribute to a regular pre-tax 401(k) or to a Roth 401(k)? Should you contribute to a Roth IRA or a Traditional IRA? Should you keep your money in cash, or invest in a taxable brokerage account? Are you taking advantage of other investment accounts like Health Savings Accounts or 529s?
If you’re a small business owner or receive a 1099 as a consultant, we can consider retirement vehicles specific to your situation. This may include SEP IRAs, SIMPLE IRAs, solo 401(k), or an actual 401(k).
The objective is for you to have as much money as possible in tax-advantaged accounts, so you can grow and keep more of your money, instead of going to Uncle Sam.
5) Give recommendations on Asset Allocation
How confident are you that your 401(k) and other retirement accounts are invested optimally? How your funds are invested or allocated, known as asset allocation, is one of the primary drivers of retirement portfolio performance.
At District Capital, we regularly assess current market conditions and consider which of these combinations of assets would be best to invest in client retirement accounts:
- U.S. stocks
- International developed market stocks
- Emerging market stocks
- Small-company stocks
- U.S. core bonds
- U.S. core bonds (short-duration)
- Emerging market bonds
- Other investments
6) Give recommendations on retirement savings contribution
Even if you’re already maxing out your 401(k), we can accelerate your retirement goal timeline by increasing your investments in other retirement vehicles. This may include an IRA, taxable brokerage accounts, after-tax 401(k) (if available via your employer plan), health savings accounts, and other investment vehicles.
7) Periodic rebalancing
Market conditions constantly change. We will advise you on the periodic rebalancing of your retirement portfolios to take advantage of market changes.
8) Fine-tune
Retirement plans evolve over time, just as our lives do. Life throws us curve balls. Laws change. We will fine-tune your retirement plan as the world around us changes and your life unfolds.
There is no retirement plan that is best for everyone. However, there is a retirement plan that is best for you, your unique situation, and your financial goals.
