Jim Billington discusses navigating the flight plan: a guide to retirement.
Listen to the interview on the Business Innovators Radio Network: https://businessinnovatorsradio.com/interview-with-jim-billington-managing-director-of-wealth-pilots-discussing-the-retirement-flight-plan/
The FLIGHT plan is an acronym for Future, Lifetime Income, Growth, Hedging, and Taxes that Wealth Pilots incorporates into all their client’s retirement preservation planning process. Overall, retirement planning involves considering not only desired spending goals and required minimum distributions but also understanding how taxes and inflation affect your lifestyle. We want to have upside market growth potential to keep pace with inflation. However, in retirement, we shift gears into the asset preservation phase from the asset accumulation phase and risk exposure is no longer acceptable to most of our clients. Hedging with protected growth strategies is critical to understand and have in place with the goal of protecting principal and income. Jim discusses the importance of adapting investment strategies to the changing market emphasizing the importance of Income Planning.
He highlights that both the stock market and bond market experienced a decline simultaneously in 2022, indicating that traditional strategies may not offer the desired protection. Jim emphasizes that relying on old, tired strategies based on past market conditions is ineffective in the current market environment. He explains that there are new aspects and triggers that can cause the market to behave differently. It is no longer a simple equation of one plus one equals two. Jim Billington stresses the need for a refreshing approach and urges listeners to consider this “big aha” moment. He emphasizes the importance of thinking critically about investment strategies and being open to new practices that align with the current market dynamics.
Legacy planning is also a crucial aspect of retirement planning, as it ensures a smooth transition of assets to family members after death. One key consideration in legacy planning is managing taxes. In the episode, it is emphasized that leaving money in qualified retirement plans for children to inherit is an inefficient way to pass on money. This is because qualified retirement plans are forever taxed, meaning that when children inherit the money, they must distribute Inherited IRA’s at ordinary income tax rates within 10 years. Some may be in higher tax brackets when they are forced to take distributions.
To address this issue, Jim Billington suggests a more efficient strategy of converting money to a Roth IRA. By converting money to a Roth IRA, the money becomes never taxed, providing a more favorable tax situation for the beneficiaries. Jim also mentions the importance of strategizing and determining the optimum tax bracket for these conversions over the next two and a half years. This ensures that the taxes paid on the conversions are manageable and align with the client’s goals.
Individuals can ensure that their assets are efficiently transferred to their family members while minimizing tax implications.
Jim explained: “People who have been in the asset accumulation phase of their life and saving for retirement come to us and they want to plan to help them preserve and protect and grow safely yet distribute this money for income, and plan how to manage the taxes. There are risks that are associated with retirement that an asset accumulation plan they come to us with doesn’t address and so the FLIGHT plan addresses those risks. There are five basic risks of retirement that we want to address with this flight plan.. These risks are 1) Longevity Risk 2) Market Risk 3) Interest Rate Risk 4) Tax Risk and 5) Long-term care risks. A FLIGHT plan that manages these risks and leaves room for Legacy planning is critically important for a well-developed Retirement Preservation and distribution strategy.”
About Jim Billington
Jim started in Retirement Preservation Planning 22 years ago as the Tech Bubble started moving towards a meltdown and he saw Wall Street throwing out all the fundamentals and taking too much risk with people’s nest eggs. He is a second-generation financial manager as his father was the Regional Director of the Nation’s largest Brokerage firm. He saw an alarming lack of expertise when it came to transitioning people from the asset accumulation phase to the asset preservation and distribution phase of retirement. At Wealth Pilots they are dedicated to helping clients make the critical decisions necessary to avoid the unnecessary and avoidable risks of retirement.