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You have steadily saved in your 401(k) and IRA, what else should you consider regarding your retirement readiness?  Retirement planning incorporates several additional financial factors beside your retirement accounts.    

When you think about your financial cash flow for retirement, naturally your Social Security benefits, pension, 401(k), or other retirement accounts come to mind.  Don’t stop here, your cash flow may also be impacted by your risk management, estate planning, and tax implications.  Contemplate how these factors may work with your overall financial preparedness and stability. 

Risk management

Insurance is a form of risk management by risk transfer.  Consider this, if you have dutifully saved during your working years, all could be lost if you face legal issues and you are underinsured, hence the importance of an umbrella policy.  Even a simple fender bender can be costly if you are not properly insured.  A high deductible may keep your monthly premium payment down, but do you have the additional resources to pay a high deductible?  Additionally, your cash flow could be impacted if you bought a home several years ago, but do not have automatic annual replacement cost value increases set on your home owners policy.  An example: You purchased your home 5 years ago.  Your home owners replacement value was initially set at $100,000.  5 years later the replacement value has increased due to an uptick in real estate prices and the cost of building.  If you had property damage; such as a fire, and your home owner policy no longer covers 100% of your replacement cost value, you are at risk for assuming some expensive out of pocket replacement costs.    

Estate and legacy

Like risk management with insurance, estate planning also helps to protect what you have worked so hard to save.   Don’t you want to ensure your assets will be managed and distributed according to your wishes during your lifetime or after you pass?  Establishing proper estate documents is an essential element of comprehensive financial planning.  A will allows you to state your wishes for how your assets will be distributed at your passing.  In contrast to a will which takes affect at your death, a trust takes place immediately after it is created and signed. (Garber, 2019)  There are a couple of important purposes for establishing a trust.  First, a revocable living trust is usually directed by the grantor (the person creating the trust).  The grantor can fund the trust with new or existing assets.   Second, when you pass away a trust allows for your assets to be distributed outside of probate.  This can help maintain your privacy (probate is a court process and public record) and reduce administrative costs to your heirs.   Other important aspects of estate planning are to have a general power of attorney and a health care proxy established.  These documents allow another person (selected by you as the grantor) to act on your behalf in case you become incapacitated and can not speak on your own behalf.  For instance, if you were hospitalized for a period of time (incapacitate but not dead) you would be unable to pay your bills.  A person you designate as having your general power of attorney could attend to keep your financial affairs in order.  It is important to choose wisely when naming a person to have your power of attorney.  This person should act with your best iterates, not in a self serving manner.       

Tax implications

When considering your financial life, savvy planners stay focused on any tax implications which may apply.  Think about the phrase attributed to Miguel Cervantes author of Don Quixote, “don’t put all your eggs in one basket”.   You most likely have heard you should maintain a well diversified portfolio in order to lessen the impact of market volatility.  Has anyone told you about the diversification factor of having different accounts types?  If all of your accounts are established on a pre-tax basis and grow tax deferred, you will owe tax on your distributions; such as with withdrawals from your 401(k) or IRA.  If instead you contribute after-tax money to a Roth IRA which also grows tax deferred, you will be able to take distributions tax free once certain requirements are met.  Diversification of account types can provide tax free distributions, but it also helps prevent a widow/widower’s tax trap.  Imagine a hypothetical couple saving for retirement.  Both parties built substantial 401(k) account balances during their working years.  Because they funded their 401(k) with pre-tax dollars, at age 72, they are must begin taking their Required Minimum Distributions (RMD’s).  If they had funded all or part of their 401(k) under as a Roth 401(k); paying tax at the time of contribution, no RMD would be required.  If they chose to take a distribution from the Roth 401(k) it would come out tax free.  Why is this so important?   As mentioned before it can help prevent the widow/widower’s tax trap.  Most likely the couple had been claiming the Married Filing Joint (MFJ) standard deduction, in 2020 the deduction is $24,800.  Suppose one of the hypothetical spouses passes away.  The survivor now claims Single a much smaller standard deduction is allocated, in 2020 it is $12,400.   Again, the couple had previously attained age 72 so the Required Minimum Distributions still occur from both the deceased parties account and the survivors account.  With these RMDs the survivors income has not decreased, but their standard deduction has gone done significantly.  The potential result may take the survivor from a previous hypothetical Married Filing Joint tax bracket of 24% up to 32% or more when filing as Single. (Korn, 2019)  


Financial retirement readiness takes many forms.  Yes, dedication to building a retirement savings portfolio during your working years is an important part of preparing for retirement.  However, the impact and necessity of additional financial planning concepts like insurance, estate, and tax analysis should not be overlooked.  Savvy investors work with various professionals like a licensed insurance agent and estate attorney who will help keep your policies up to date according to your specific needs, and make documents changes as your life evolves.  Talking with a tax professional can help you prepare both for immediate tax needs and future tax needs.  Finally, a financial planner will help you coordinate these various planning strategies in a comprehensive manner creating a dynamic roadmap and helping to counsel you on your financial journey to retirement.  

About the Author

My name is Marianne Martini Nolte, CFP®   As a Certified Financial Planner™ practitioner, I provide fiduciary financial advice and  services for individuals, families, and small business owners.  In particular, I have a passion for working with women in transition, new investors just starting on their path to financial independence, and families seeking special needs planning.  This article is intended as a high level view.  For more in depth information, please reach out: 

Marianne Martini Nolte, CFP®

Imagine Financial Services 


Phone, (760) 846-2569.  



Garber, J. (2019, March 21). Learn the Notable Differences Between a Will and a Trust. Retrieved July 13, 2020, from

Korn, D. (2019, July 19). Beware the ‘widow’s penalty’ tax trap. Retrieved July 13, 2020, from

The opinions expressed in this newsletter (article) are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to accuracy or completeness. 

Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation (PSEC), a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Ave, Carpinteria, CA. 93013, (800) 874-6910. Imagine Financial Services and PlanMember Securities Corporation are independently owned and operated companies. PlanMember is not responsible or liable for ancillary products or services offered by Imagine Financial Services or this representative.  Marianne Martini Nolte, CA Insurance Lic #0J02045.