Nearing Retirement? Get to Know Retirement Advisor Alex Lynch

Three Questions with Alex Lynch

Seattle-area financial advisor Alex Lynch says his most important duty to his clients is ensuring they never run out of money. We asked Alex to answer 3 questions helpful to people approaching retirement who want to enjoy their golden years and make their money last a lifetime.

Q: Will my taxes be lower when I’m in retirement?

Alex: Oftentimes clients are surprised when we project out their retirement income that their tax bracket does not fall significantly in retirement and often increases. Between losing some of the tax deductions clients were able to enjoy while working and incurring taxes to generate the income in retirement clients need, their tax rate does not always fall (i.e. withdrawing money from 401k/403b is a taxable transaction).

At Jarvis Financial, our approach with clients is to project out their tax liabilities over both the next several years and their lifetime. With our goal being to minimize their lifetime tax bill, not just the bill from any one year. Clients are often surprised when we suggest paying more tax before retirement (i.e. Roth conversions) and then delighted by how the numbers look over the long term. During this time, we are thoughtful about how tax rates could change in the future, how unexpected large withdrawal needs could impact their taxes, and a client’s goals for charitable/estate planning.

Q: How should I invest when I’m nearing retirement?

Alex: When those close to retirement ask us this question first, we have to determine that retirement is feasible. Then of highest importance is for clients to begin building a proverbial “war-chest.” This generally means having 5-10 years of retirement expenses set aside in a low-risk account. While we are in our careers and actively saving and accumulating wealth, dips in the stock market are our friends and buying opportunities. The converse is true when we are required to draw income from our portfolios, and we are effectively in the de-accumulation game. At Jarvis Financial, we have found that regularly discussing our “war-chest” and using it as a bridge during less favorable times in the markets has worked extremely well for clients.

Q: What is biggest financial surprise to new retirees?

Alex: I see recent retirees most surprised by the cost of private health insurance before Medicare and the various out of pockets costs associated with Medicare. For individuals retiring before Medicare eligibility, we encourage you to talk with your current employer about any healthcare options after retirement and go on the various health exchanges to have a planned budget for healthcare expenses. Upon Medicare eligibility, it’s very important to understand that not all the parts of Medicare are free. Part B alone could cost $500 a month for each individual. And having a plan for the various Medicare/supplemental options before retirement is a must.

Get to Know Alex Lynch:

View Alex’s profile on Wealthtender or visit his company’s website to learn more.