How Should Huntsville Engineers Start Planning for Retirement?

As an engineering professional in the Huntsville area, your time is extraordinarily valuable. In this article we are cutting right to the key considerations you need to think about for long-term planning and investing.

1) Start with Asking Questions and Building a Plan

No aerospace product lifts off without years (sometimes too many) of planning and testing prior to flight. Smart investing is the same. Establishing clear, measurable goals is key. Replacing your employment income with retirement income is usually goal number one. However, many of our client’s goals are much broader. Consider making gifts to charities, supporting your children and grandchildren, and actually doing all of those things you never had time for. In fact, research from Morningstar, Fidelity and others shows an increase in total spending leading into and immediately following retirement. We recommend planning to actually increase your full pre-retirement living expenses at the onset of retirement to cover these items. Your expenses will likely go down over time.

2) Evaluate your Assets

Look at the assets you have accumulated to fund your specific goals.  Consider your 401(k), ESOP plan, investment accounts, rental properties and other assets you own. When you think about investing your assets long-term, remember that the objective is to meet your goals for life and beyond. Your portfolio should be constructed to deliver enough return to accomplish your objectives while minimizing the risk you take and fees you pay along the journey.

3) Make Smart Decisions about your ESOP Plan

Managing the exit from an ESOP plan is an important part of planning for many engineers and professionals in the Huntsville area. Often professionals build large investment positions in their company's stock through these plans over time. This concentration in one company is great for wealth building, but creates risk once you retire. Having all of your assets invested in one company exposes you to substantial risk if that single entity falters down the road. As you review your plan, first understand the funds that you are eligible to withdraw based on the plan's vesting rules. Second, consider whether you should exit the ESOP completely, or leave a smaller percentage of your wealth in the company's stock via the plan. Lastly, consider the tax implications of withdrawals from the plan. Rolling assets over into an IRA to continue growing is one way to continue deferring taxes while building long-term wealth to support your retirement needs

4) Test the plan

Just link good technology, no plan is ready to go until its been tested. Your investment plan should be designed to hold up in down markets and recessions. Using analytics, you should understand the likelihood accomplishing your goals through a variety of potential economic scenarios. Being able to test the plan, take it apart, review it, and fully understand it will provide you with confidence in your future.