Pre-Retirement Planning for Banking Professionals

As retirement becomes more than just a vague future concept, you may begin to feel pressure to develop a more concrete plan for your income, your spending, your asset allocation, and your withdrawal rate. And when you’re in the banking industry, which can often be a feast or famine one, planning for retirement can involve even more variables. Below, we’ll discuss three ways banking professionals can plan for a secure and prosperous retirement.

Don’t Just Have One Plan

In the banking world, things can turn on a dime. One year, you may find yourself facing unexpected layoffs; the next, you could be wondering what to do with a sizeable bonus. It’s important to develop several retirement plans that can account for these unpredictable fluctuations.

For example, you may want to create a retirement plan under the assumption that you’ll earn a fairly conservative baseline level of income over the next decade. Once you have this plan in place, if you receive bonuses that allow you to exceed this income, you may be able to shorten your retirement horizon by a specific number of months for each additional $10,000 earned.

By having multiple plans available, you can help maintain your ability to adapt to whatever changes may come your way.

Begin Expanding Your Tax Options

Not all retirement funds provide the same return once taxes are taken into account. When deciding which funds to withdraw from, and when, it’s important to perform an apples-to-apples comparison by calculating the after-tax proceeds of each fund. You may find that withdrawing a smaller amount from several types of funds each year reduces your tax bill more than withdrawing one year’s expenses from an IRA, the next year’s expenses from a Roth, et cetera.

By that same token, it’s worth taking a look at what funds you’re holding in which accounts to ensure that they’re as tax-efficient as they can be. For instance, putting high-dividend stocks in a tax-deferred account like a traditional IRA can help these funds grow even more quickly by deferring the tax bill on the dividend payments. Meanwhile, a taxable account can be used for long-term investments in non-dividend stocks, since your capital gains taxes won’t come due until you cash out.1

Find the Right Financial Professional

If you’ve spent your career in the banking and financial industry, you may assume that you’re the last person who needs a financial professional to help navigate retirement. But as the saying goes, “you don’t know what you don’t know”—and unless you’ve concentrated in retirement planning yourself, you likely can benefit from the oversight of a seasoned professional as you’re entering this new phase of life.

A financial professional can help you direct your current retirement contributions, select the appropriate asset allocation for your life plan, determine how to allocate your withdrawals after retirement, and so much more. By getting a comprehensive overview of your financial situation and some balanced advice on how to proceed, you’ll be better prepared to tackle whatever adventure comes next.




Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Asset allocation does not ensure a profit or protect against a loss.

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