The Executive's Retirement Readiness Checklist

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As retirement looms for senior executives, proper planning is crucial to align this shifting phase with your wealth profile and lifestyle vision. While each executive situation is unique, adhering to a robust readiness checklist can set you up for long-term success.

This retirement readiness blueprint for executives covers:

 ·        Risk management assessment

·        Pension & 401 (k) Optimization

·        Social Security Optimization

·        Income & Cash Flow Planning

·        Healthcare and Insurance Alignment

·        Tax Planning

·        Estate Strategy Updates

 Let’s explore these retirement planning focal points for executives preparing to transition from their peak earning years:

Risk Management Assessment

Executives should begin evaluating their retirement goals, including desired lifestyle, travel plans, healthcare expenses, and legacy planning. Executives should review their investment portfolio and assess the risk level. Consider diversification, asset allocation, and the appropriate risk tolerance for this stage of life. Determine if adjustments are needed to align with retirement objectives and time horizon. Executives should assess their tolerance for market fluctuations and their ability to withstand downturns in retirement. Assess the sustainability and potential risks associated with various income streams such as Pensions, Investment accounts and Social Security. Consider the impact of inflation and market volatility on retirement income. Executives should have regular reviews to monitor changes in their financial situation, market conditions, and evolving retirement goals to ensure the risk management strategy remains aligned.

Pension & 401(k) Optimization

As you enter the five-year window before retiring, get detailed projections of your expected pension and 401(k) distributions. Seek specialist advice to maximize each vehicle with distribution planning and beneficiary decisions. Draft your personalized payout strategy early, so you can gather all essential facts to make the best possible decisions.

Pension payout options must be reviewed carefully as these selections may not be reversed once chosen. Will you receive a taxable payout on your life only or will it be a combination of yours and your spouse/partner’s life? Do you prefer a periodic taxable payout, or would it make more sense to take a lump sum payout that can be rolled into an IRA remaining tax deferred until Required Minimum Withdrawals (RMD) arise? Model different scenarios to quantify tradeoffs.

Upon retirement, 401(k) plans typically offer three options. Comparing the benefits vs. costs associated with each option is important when deciding what to do with these assets come retirement. You may choose to remain in your company’s 401(k) plan after retirement. While you won’t be able to make any more contributions to this account, you will be able to take periodic payments over time if you choose and remain invested using the investment choices within the plan that are afforded to all 401(k) plan participants. You may choose to move your assets to your own personal Individual Retirement Account (IRA). This movement is called a ‘401(k) Rollover’ and allows you to take control of your 401(k) assets while not removing them from their tax-deferred status. While company plans are slightly different, the typical benefits of a ‘rollover’ would be the opportunity for a larger selection of investment vehicles to choose from and the ability to employ professional management of these assets if you choose. As mentioned earlier, it is important to consider all fees associated with these benefits. You may choose to remove the assets from the 401(k). This involves taking the assets out of the 401(k) and moving them to a non-qualified taxable account. This option would have considerable tax consequences given that the holdings within this account have not previously been taxed and once removed from a tax-deferred account they become fully taxable at ordinary income tax rates. This does not apply to Roth 401(k)’s as these plans are funded with after tax dollars thereby having no income tax due when removed, but possible penalties for early withdrawals. It is important to consult with a tax professional when making these decisions.

Social Security Optimization

When deciding on Social Security, there are several factors that need to be considered. Once you have chosen a payout method, it cannot be reversed. Understand your Full Retirement Age (FRA) which is the age at which you are entitled to full benefits. Your FRA is based on your year of birth and ranges from age 66 to 67. Taking Social Security early will reduce your lifetime payout and waiting until age of 70 will give you the maximum lifetime payout. Whatever payout age you decide on, your spouse and in certain situations domestic partner, will receive this payout for the remainder of their life should you predecease them. What is your family health history? Poor family longevity might mean taking Social Security earlier. When making these decisions its best to seek advice from a financial advisor or Social Security Specialist who can provide personalized guidance based on your cash flow needs and specific situation.

Income & Cash Flow Planning

Once pension and social security projections are known, strategize durable, diversified income streams to supplement. For most executives, a foundation of tax-free bonds and quality dividend paying stocks help secure a healthy cash flow and equally important portfolio diversification.

Be conservative estimating returns in your projections. Will you take on a second act as a consultant, or will you travel the world and never collect another paycheck? Will there be large cash outlays periodically or family commitments that need to be considered such as adult children or aging parents? What is the balance between taxable accounts and tax-deferred accounts such as IRA’s, 401(k)’s and Deferred Comp plans? How much of a cash reserve is needed so as not to sell off assets at just the wrong time? Working with a financial advisor professional can help you collaborate on ideas that best meet you and your family’s needs.

Healthcare & Insurance Alignment

Retirement makes comprehensive insurance coverage more crucial. Conduct a risk analysis, then strategically transition corporate policies to strong individual coverage.

Reviewing disability and long-term care needs are important to plan for. Self-funding or passing the risk on to an insurance carrier are important decisions that should be considered. Which Medicare plans make most sense at age 65? Executives commonly underestimate healthcare costs so build robust contingency funds to supplement Medicare benefits. How will you bridge the gap to Medicare payouts if you retire prior to age 65? Insurance may be a beneficial component as part of your Estate Plan. Considering the sunset provision taking place in 2026 and how this may affect your estate once you pass is critical. After December 31, 2025, the lifetime exemption will revert to pre-2018 levels of $5.5 million per individual. Are you prepared for that? Certain Insurance structures can help alleviate the estate tax burden that comes at the passing of you and your spouse/partner.

Tax Planning

Executives often have stock options and RSU’s that need to be carefully managed to minimize tax implications upon retirement. It may be beneficial to strategize the timing of exercising options or selling RSU’s to minimize tax liabilities.

Executives should plan for tax-efficient rollovers and distributions from retirement accounts considering factors such as required minimum distributions (RMD’s), tax brackets, and potential penalties.

Executives can explore tax-efficient charitable giving strategies such as donor-advised funds or direct donations, to reduce taxable income at retirement.

It is important to understand the tax implications of health care expenses in retirement such as Medicare premiums and potential deductions.

Estate Strategy Updates

Executives should review and update their estate plan, including wills, trusts, medical and financial directives as well as beneficiary designations to ensure a smooth transfer of assets while minimizing estate taxes. When updating health directives consider establishing guardianship provisions for minor children.

Maximize lifetime estate and gift tax exclusion amounts available before 2026 policy window closes. Frontload large QTIP trust gifts where possible under current high exclusion rules. Now is a good time to revisit with your estate attorney and financial advisor if it has been a while or if there have been recent material changes within the family structure, health or other situations that would warrant revisiting.

The cornerstone of retirement readiness for executives remains tangible lifestyle visioning paired with robust continuity planning. Retirement marks your opportunity to cement significance beyond career title as life’s next vibrant chapter unfolds. With clear eyes on what matters most, backed by proactive planning, your executive retirement journey is just ahead.


This is being provided solely for informational and illustrative purposes, is not an offer to sell or a solicitation of an offer to buy any securities. The factual information given herein is taken from sources that we believe to be reliable but is not guaranteed as to accuracy or completeness. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed here. The concepts illustrated here have legal, accounting and tax implications. Neither Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your individual circumstances. For more information about Janney, please see Janney's Relationship Summary (Form CRS) on which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.



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