Retirement Planning

Retirement Plan Should Tackle Threats to Your Nest Egg

The annual Retirement Income Strategies and Expectations (RISE) survey of investors found that nearly one-half – 46 percent – of all participants are worried about paying for healthcare expenses when they retire. Fully one-third of people surveyed in 2018 said they are worried about running out of money in retirement to cover needs first, which is primary. Then we can plan for wants, likes and wishes after the needs are secure.

As a retirement specialist, financial planner SteVan Gates understands these fears and helps clients create a retirement plan to prevent such “out-of-money” scenarios.

“Our approach to retirement planning is safety first, with income planning you can never outlive,” said Gates, a Chartered Retirement Planning Counselor (CRPC®) president and managing partner in the Financial Strategies Institute, a wealth management firm in Salt Lake City, Utah.

The “safety first” approach includes finding ways to limit the three biggest threats to your retirement nest egg – long-term care costs, taxes, and sequence of returns risk – in other words, taking principle from equities when in down markets and thus eroding principle and longevity.

fsi400x560“The biggest risk in retirement that you have no control over is the long-term care risk. Planning for long-term care and longevity is key in investment for protecting your hard-earned assets in retirement planning. Long-term care is something that can be self-funded, however, long-term care insurance has greater leverage and protection on remaining nest eggs. We believe, and the math validates, if you qualify, you need to be insured,” Gates said, and he added, “Long-term care insurance is really protection for your legacy and for your spouse.”

New income tax federal regulations now give advisors options to address the second big risk – taxes that eat away at retirement savings. Now with lower tax brackets, and long life expectancy, an IRA to Roth IRA conversation makes even more sense. This is one of numerous tax strategies to consider according to Gates who taught a 2018 Tax Reform Class at his local university extension.

Rounding out the trio of threats, the “sequence of returns” risk comes into play in years like 2001-2003, 2008, and December 2018 when the stock market was down substantially.

“Usually when people have a portion of their investments in the stock market, as they should to keep ahead of inflation, they draw on their interest when they take money out. However, when the market is down as much as it was last year or these other time periods, they are pulling from their principal and realizing a loss” explained Gates. “If not managed properly, those actions can reduce the longevity of equities by several years.”

The majority of the work must be accomplished with the help of a professional using best practices of investment management as Vanguard’s academic white paper points out in their article, “The Value of Professional Advice,” which quantifies seven investment best practices. The BIG two are behavioral investment management and distribution strategies. This difference can add 3 percent annually to your returns over the long term when these investment advisor best practices are used. Also called the “3% Rule,” Gates and his firm, utilize these seven best practices.
Summing up the firm’s safety-first philosophy, Gates said, “Almost universally, everyone wants a retirement plan that will result in them paying the least amount in taxes, having the highest amount of income, having the least amount of risk, having guarantees, and they want it to be 100 percent accessible. We understand those universals.”

Clients at Financial Strategies Institute receive a customized plan that is built around their needs first, but that also considers their wants and goals. Gates refers to this as “lifestyle investing” that allows clients to maintain their lifestyle after retirement. His preference is to create a plan for predictable, certain income from a combination of Social Security, pensions, annuities, bond strategies (with bonds to a lesser degree with our current long-term increasing interest rate environment), equities interest, dividends, and capital gains. The company generally works with clients with at least $500,000 to invest.


“I grew up a practitioner in the wealth accumulation phase. A distribution specialist addresses and solves these BIG risks to protect retirement lifestyle using various strategies. One strategy is what we called lifestyle investing. That is protecting the needs of retirement income as a priority. Using tools creating income that are certain, predictable and guaranteed. Then, we look at the wants, likes and wishes only after. A wealth accumulation advisor specialist often overlooks the specialized strategies in this distribution phase strategies such as not eliminating taxes drag, sequence of returns risk and long-term care asset protection strategies.

“You want to have a human communicate with you and make course corrections. Specific strategies require humans to make changes based on taxes, goals and objectives, time horizons, income needs, or market risks,” Gates said. “Nothing is on autopilot. Needs change and we make alterations. It’s not a one-time plan – it’s monitored, and we make course corrections.”
Presenting clients with suitable investment options that match their time frame and goals is part of Gates’ role as a fiduciary and an investment advisor.

Active in financial education for more than two decades, Gates teaches courses on topics such as tax reform, tax strategies, retirement transitions, income planning and estate planning through various education and corporate forums. He also provides educational seminars for clients of Financial Strategies Institute. He decided to become a financial planner after seeing his father as a home builder go bankrupt in 1979 when interest rates skyrocketed and homes were not selling. He saw firsthand what poor advice looks like and the lack of planning, diversification, rainy day funds, protection for different life contingencies. Then, learning about the “time value of money” and other economic principles while he attended college and now 29 years later, he is a successful practitioner, elite planner and trusted advisor.

For more information about Financial Strategies Institute, visit:


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