- Appropriate savings rate and budgeting. Please reference “Savings goals” and “Budgeting process” topics for further refinement.
- Appropriate asset allocations, glide path, and potential rebalancing.*
- Appropriate retirement portfolio withdrawal rate (“safe withdrawal rate”). Commonly, 3-4% of retirement portfolio value annually or 3-4% of initial retirement portfolio value with annual cost-of-living adjustment (COLA) to the annual withdrawal amount (e.g., adjusted based on Consumer Price Index or CPI). Note, this may be highly variable depending on individual circumstances.
- Optimal allocation of asset classes between taxable and tax advantaged accounts to maximize tax efficiencies (asset location).*
- Traditional (pre-tax) and / or Roth (post-tax) contributions and conversions within IRAs and cash or deferred arrangement (CODA) type retirement plans (401(k) or similar plans) to maximize tax efficiencies.
- Use of backdoor Roth, mega backdoor Roth, and Health Savings Account (HSA) strategies to maximize tax efficiencies.
- Retirement income and distribution planning: Efficient liquidation of retirement funding assets to maximize tax efficiencies and portfolio longevity in retirement. One conventional heuristic involves liquidation and utilization of least tax advantaged retirement assets first; however, a hybrid or blended retirement funding asset liquidation approach maximizing the filling of low or no income tax brackets will likely prove superior.
* Please reference “Investment portfolio construction” topic for further refinement.