Connecticut Five Star award winner

Making good financial decisions at these age milestones


Working Americans at or approaching retirement age today face many unprecedented challenges unique to their generation. That’s why it’s important to have a retirement plan that addresses these challenges and uncertainties head-on. One of the keys to doing that is being aware of the retirement planning milestones that occur from age 50 onward. Several of these milestones present you with options that could significantly impact whether you have enough income to achieve your retirement goals.

 ·  Age 50 – This is when you are first allowed to make “catch-up” contributions to 401(k)s and other tax-deferred employer-sponsored retirement plans, as well as IRAs. Amounts are subject to change each year, and up-to date guidelines are always available at

·  Age 55 – If you separate from your job, you may be eligible at this age to take an income distribution from your 401(k) or another employer-sponsored plan without paying an additional 10 percent tax for early withdrawal. Although there are exceptions to this “age 55 rule,” there are also ways to use it to your financial advantage depending on your needs and situation. Perhaps the most important thing to consider, however, is whether your decision allows you to maintain a sufficient focus on “financial defense” in your overall strategy. Starting at age 55, financial defense becomes increasingly important to ensure you are protecting the assets you’ll need to generate retirement income. Another way to look at it is to realize that by age 55, you should start shifting from a “growth mindset” to an “income mindset.” Focusing primarily on portfolio growth and asset accumulation in your 30s and 40s is reasonable, but by your mid-50s, it’s important to recognize that portfolio growth no longer needs to be your top priority—nor should it be.

·  Age 59½ – Withdrawals from your employer-sponsored plans are no longer subject to the 10 percent early withdrawal tax once you reach this age, but you will still owe taxes on distributions from traditional 401(k)s and traditional IRAs. Whether you need to or want to take advantage of this rule for any reason depends on many factors, including your retirement goals. For most people, their primary objectives are to have reliable income throughout retirement, avoid any major financial losses, grow their portfolio at a reasonable rate, and to try to leave a financial legacy for their loved ones.

·  Ages 62 and 67 – We’ll discuss these ages together because they both relate to Social Security. At 62, you are eligible to receive Social Security income at a reduced rate. For each year you postpone taking your benefits (until age 70), your monthly check will be larger. If you wait until at least age 67, that is considered your “full retirement age,” meaning the age at which you may first be entitled to receive unreduced Social Security benefits. And, if you wait until age 70, you’ll get the biggest possible monthly benefit for Social Security— potentially as much as 76% larger than if you had started receiving payments at age 62. If you’re like most people, whether you start taking your benefits at 62, 67, or 70, Social Security alone won’t provide nearly enough income to achieve your retirement goals. Thus, you need the right asset allocation to maximize your benefits, and you need to coordinate them with your other sources of retirement income. But how? Banks, CDs, and money markets earning less than two percent are not great options to supplement your Social Security right now, what about the stock market? Well, the potential for another major market crash like those we saw from 2000-2003 and 2007-2009 creates the need for “financial defense” after age 50, but that’s only half the problem. With the average dividend yield in a diversified stock portfolio today at around just 2.5 percent, that’s still only $25,000 in annual income even if you have a full $1 million invested, which most people don’t. Fortunately, there are many strategies and options specifically designed to generate income through interest and dividends that can be coordinated with your Social Security benefits to help ensure your income will align with your retirement goals. Best of all, these options carry far less risk of a major loss than stock market-based strategies, which means they satisfy your increasing need for “financial defense” after age 50.

·  Age 65 – At this age, most Americans are eligible for Medicare, the federal government’s retirement health insurance program, as well as for a private “Medigap” insurance policy to help with co-payments and deductibles not covered by Medicare. Unforeseen healthcare costs are a major factor that can undermine any retirement plan, so it’s important to work with your advisor to discuss and coordinate decisions specifically relevant to healthcare. This also illustrates why it’s so important to have an advisor who works with you on an individual and ongoing basis; while your goals may not change, circumstances often do.

·  Age 70½ – The government stipulates that Required Minimum Distributions (RMDs) from traditional retirement plans such as 401(k)s or IRAs must begin at this age. The tax penalty for not taking sufficient RMDs each year after age 70½ is a whopping 50 percent. Thus, it’s important to do your RMD calculations correctly, and it’s equally important to satisfy your RMDs without compromising your overall financial strategy and potentially putting your retirement goals at risk. For example, using a strategy in which you satisfy your RMDs from capital gains or capital appreciation in your stock market-based investments rather than from interest and dividends is really no different than taking them from principal. Again, that’s because sometimes, when you invest for appreciation, you end up with depreciation instead, and when you bank on growth, you end up getting shrinkage. Admittedly, this was less of a danger years ago. In the 1980s and 1990s, during the best long-term secular bull market our country has ever seen, investors conceivably could have satisfied their RMDs completely from capital gains rather than dividends without harming principal. Since the year 2000, however, the opposite has been true. That’s because, as mentioned, in this time, the market has seen two major drops of 50 percent or more, and many analysts today increasingly believe that a third such drop is very possible.

Whatever age milestone you may be at or approaching, keep in mind that retirement planning in today’s complex and uncertain financial environment shouldn’t be a “do-it-yourself” activity for most people. The far better alternative is to find and work with an experienced, qualified independent financial advisor. Find someone who makes client education a high priority, who has a specific and consistent vision, and who specializes in helping clients address the unprecedented challenges unique to today’s generation of






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*Winners appearing on this page do not pay a fee to be considered or to win the Five Star Award. Professionals with a digital profile have paid a promotional fee.
The Five Star Wealth Manager award, administered by Crescendo Business Services, LLC (dba Five Star Professional), is based on 10 objective criteria. Eligibility criteria – required: 1. Credentialed as a registered investment adviser or a registered investment adviser representative; 2. Actively licensed as a registered investment adviser or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by Five Star Professional, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or Five Star Professional’s consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through Five Star Professional’s consumer complaint process; feedback may not be representative of any one client’s experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria – considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. Award does not evaluate quality of services provided to clients. Once awarded, wealth managers may purchase additional profile ad space or promotional products. The Five Star award is not indicative of the wealth manager’s future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their client’s assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. For more information on the Five Star award and the research/selection methodology, go to 3178 Connecticut area wealth managers were considered for the award; 293 (9 percent of candidates) were named 2018 Five Star Wealth Managers. 2017: 2,218 considered, 283 winners; 2016: 1,985 considered, 417 winners; 2015: 2,398 considered, 468 winners; 2014: 3,926 considered, 515 winners; 2013: 2,263 considered, 531 winners; 2012: 2,204 considered, 503 winners.