Wade Pfau - Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success

Copyright 2021 by Wade Donald Pfau. All rights reserved.

Published by Retirement Researcher Media, Vienna, Virginia.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. Requests to the publisher for permission should be addressed to .

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For information about special discounts for bulk purchases, please contact Wade at

Library of Congress Cataloging-in-Publication Data:

Pfau, Wade Donald, 1977

Retirement Planning Guidebook / Wade Donald Pfau.

pages cm

Includes index.

ISBN [978-1-945640-09-4] (paperback) - ISBN [978-1-945640-10-0] (e-book) - ISBN [978-1-945640-11-7] (hardcover)

Library of Congress Control Number: 2021912549

Retirement Researcher, Vienna, VIRGINIA

1. Retirement Planning. 2. Financial, Personal. I. Title.

Cover Design: Trevor Alexander

To those seeking to do something great with their retirement

Table of Contents

Preface

The book is designed to help readers navigate key decisions necessary for a successful retirement. The process of building a retirement income strategy involves determining how to best combine retirement income tools to optimize the balance between meeting your retirement goals and protecting those goals from the unique risks of retirement. I engage in a deeper exploration of retirement income tools, including investment-based approaches and insurance-based approaches such as annuities. Most books on retirement income are written from the perspective of one retirement income style. Here I adopt a more comprehensive approach since different styles are legitimate and the choice depends on personal preferences.

Additional chapters then dig deeper into other important aspects for a retirement income plan, including how to develop a strategy for claiming Social Security benefits, how to make decisions related to Medicare and other health insurance, how to structure a plan for managing long-term care needs, and how to choose your retirement housing and incorporate housing wealth into your planning. This is followed by a deeper investigation of tax issues and how to structure your retirement income to create the most tax-efficiency during your life as well as for your beneficiaries. With legacy planning, I also explore how to get your finances organized for incapacity and death.

After reading this book, I hope you will be able to identify your preferred retirement income style, understand retirement plan risks, and assess your retirement preparedness by comparing the value of your retirement assets and liabilities.

The focus then shifts to the non-financial aspects of a successful retirement, including the need to find your purpose and passion, to understand if there is a role for work in retirement, to enhance your relationships and social connections, and to maintain an active and healthy lifestyle.

The book includes detailed action plans to help with your decision making. The final chapter fits these pieces together into an integrated series of steps to achieve financial and non-financial success in retirement. Readers will come away with the detailed knowledge and planning steps needed to make the most of their retirement years. The simple act of proactively planning for retirement can improve retirement satisfaction and happiness. Risks become less nebulous, and those with a plan can feel more comfortable about what comes next.

Let me address the general philosophy that guides this book. I focus on creating efficiencies for your retirement to stretch your resources as far as possible. A retirement income plan should be based on planning to live, not planning to die. While a long life obviously involves more expense than a shorter life, this assumption should take precedence given that life spans are increasing and the risks involved of under-planning. Fight the impatience that could lead you to choose short-term expediencies carrying greater long-term costs. Many efficiencies can be gained from a long-term focus that supports a higher sustained living standard.

We will see many examples that focus on building a better long-term plan. These include delaying Social Security benefits, purchasing annuities with lifetime income protections, building a diversified portfolio offering long-term prospects for growth, choosing lifetime income options for defined-benefit pensions, identifying reserve assets, strategically paying more taxes to enjoy substantial future tax reductions, making home renovations and living arrangements with the idea of aging in place, planning for the risk of cognitive decline that will make it harder to manage your finances with age, developing an estate plan, and opening a line of credit with a reverse mortgage.

With respect to the non-financial aspects of a successful retirement as well, I do emphasize the dichotomy that develops. While on the financial side we must plan for the possibility of a long retirement, it is the non-financial side where we need to also better plan for the possibility of a short retirement. We do not know how long our health will remain, and we must prioritize making the most of our available time. It is also important to enjoy the present while being prepared for the future.

This book is current with tax and estate planning laws as of mid-2021. However, these are both areas with potential for major changes to be made over the coming years, and some sections could lose relevance. RetirementResearcher.com will provide a resource for updates on rules or laws impacting retirees until I can get an updated edition of this book released. Please visit www.retirementresearcher.com and sign up for our weekly newsletter with our latest articles, invitations to webinars, Q&A sessions, and more. The newsletter arrives to your inbox each Saturday morning.

I also welcome your feedback and questions. You can reach me at:

Wade Pfau

Dallas, TX

August 2021

Acknowledgments

Writing a book is a major endeavor, and I have been helped along the way by countless individuals. First and foremost, I would like to thank my colleagues at Retirement Researcher and McLean Asset Management for providing the vision and resources to make this book possible. I am grateful for the leadership and willingness of Alex Murguia and Dean Umemoto to build a firm that turns my retirement income research into practical solutions for real-world retirees. I would also like to thank Trevor Alexander, Briana Corbin, Rob Cordeau, Bob French, Paula Friedman, Christian Litscher, Morgan Menzies, Kyle Meyer, Jason Rizkallah, and Jessica Wunder.