Five key insights you need to know about retirement

Many people don’t give retirement enough thought and wait until it is too late to plan.

It’s important to start with the end game in mind. Dream big and plan ahead.

“Our philosophy is that you should start from the other end of the equation and ask yourself several questions. What do you want to accomplish? What do you envision yourself doing? If you could fast forward five, 10 and 15 years ahead in time, what does your ideal lifestyle look like?” says Adam Spiegelman, wealth management advisor at Northwestern Mutual in San Francisco.

Once you have answered the basics you can start by filling in the specifics. You need to determine what your lifestyle will cost.

Retirement can look very different for everyone, he says. Many business owners want to continue to consult in some capacity but still have the flexibility of not having to go into the office on a daily basis.

Smart Business spoke with Spiegelman about what to consider now in order to make your future dreams a reality.

How much should you be saving?

A big misnomer is that in retirement you’ll only spend 60 to 80 percent of your pre-retirement budget. Today, that’s often not true, especially if you step up travel, join a country club or buy a second home.

It takes a tremendous amount of capital to provide a modest amount of income in retirement. People are living longer and that needs to be taken into account when formulating your plans.

Save as much as you can, even if your significant wealth building doesn’t occur until your 40s and 50s. Plan for extra costs, like grandkids or helping your child out with a wedding or a down payment on a home.

Where does risk management factor in?

Often overlooked, a well-defined exit strategy needs to be laid out well in advance.

Consider diversifying away from your business as well. Your business is your home run. Because there is inherent risk in putting all your eggs in one basket, it’s important to spread out the risk. Real estate or investing in the stock market can provide diversification.

Your exit strategy needs to protect you and your family in the event of a disability or premature death. Consider writing and funding a buy-sell agreement. Do you want to work with your partner’s widow in the event of their untimely death? How long can your business support paying your partner if he/she has a stroke and can’t work again?

What should employers consider prior to retirement in terms of employee benefits?

You can put money away for your retirement and help your employees at the same time. If you have a 401(k) plan, consider including a profit sharing component. Sharing profits with your employees may allow you to max out a contribution for yourself. The end result can be quite beneficial to you both.

How do taxes fit into the big picture?

People often overlook small decisions that can have adverse tax consequences. Not making that extra contribution to a pre-tax plan or taking less of a distribution from an IRA in retirement can potentially cost money by altering the tax bracket you are in. The best thing you can do is to arm yourself with a good accountant, a strategic thinker who understands your situation and can develop a long-term strategy.

What are keys to investment management and strategies for strong financial planning?

Fees and investments need to be transparent. Although many do not want to know all of the details, a strong adviser will help provide the level of detail you can understand.

Also, remember every portfolio is unique. If someone with a $10 million net worth wants to invest $2 million, that portfolio will look entirely different than if someone with a $3 million net worth wants to invest $2 million of it. The investors’ situation and their tolerance for risk will be very different.

After determining the lifestyle you want, take into account Social Security and pension benefits, whether inheritance factors in, how much you’ve accumulated and how much you’ll pay in taxes. These are all pieces to the puzzle, and every puzzle is unique.


Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities) and its subsidiaries. Spiegelman is an insurance agent of NM and Registered Representative of Northwestern Mutual Investment Services, LLC (securities), a subsidiary of NM, broker-dealer, registered investment adviser, member FINRA and SIPC.


Insights Wealth Management is brought to you by Northwestern Mutual