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3 Handy Tips to Optimize Your Retirement Assets

Elderly man with cash & other retirement assets

Have you ever heard the phrase “Begin with the end in mind?” This is a good way of summarizing how you should treat your retirement planning and estate planning. It makes sense to think of them together instead of considering them two separate things. This short article will explain what we mean and how to optimize your retirement assets as you do estate planning.

Don’t Put All of Your Eggs in One Basket

The first thing we want to say is that you don’t want to have all of your assets in one “bucket.” For example, you don’t want to have all of your money solely in stocks, as that can be risky, and if there’s a market downturn, the value of your assets will suffer. At the same time, you don’t want all of your money in things like cash or low-interest treasury bonds. You’ll miss out on growth during bull markets if you do that.

Diversification is the safer bet. You want some money in low-risk assets, so you don’t lose everything. But you also want to have some in higher-risk assets so that they can grow.

Your diversification isn’t just about high vs. low risk, though. It’s also about determining how many assets you want in your name vs. putting aside for estate planning.

Core Assets vs. Wealth Transfer Assets

When you work with an estate planning attorney, they’ll help you work the numbers to understand how much money you need to live on vs. how much can be set aside to transfer to your loved ones as part of estate planning.

For example, they may help you determine that in addition to the core assets paying for your lifestyle, you have about $1.5M that can be set aside as part of your estate planning. You may decide to open a trust for those assets, for example.

There are a lot of types of trusts out there. Regardless of what you want to do with your retirement assets in terms of passing them onto a person or organization you care about, there is probably a trust out there that can help you do that.

There is another aspect of looking at your retirement assets and estate planning to consider: tax-deferred assets and IRAs.

Why Tax-Deferred Assets and IRAs

Not all assets are born equal. Some, such as IRAs, are nice because they allow you to deposit funds without paying taxes on the earnings. For example, if you deposited $5,000 in an IRA one year, your taxable income was reduced by $5,000, as you probably know.

The thing is, the taxes on those IRA accounts have to be paid when you sell the assets. In fact, it’s not just the original money deposited that is taxed – it’s also the earnings.

This is different from a ROTH IRA, where you pay taxes on the year they were earned, but you don’t have to pay taxes on the earnings when you sell the asset.

Why is this important to consider? Because when you pass on the funds in an IRA account, say to your grandchild, the grandchild will be taxed on the funds withdrawn. So if you don’t want your grandchild to be taxed for those funds, you’ll want to consider a different type of asset to pass on to them.


The world of estate planning can be complex and confusing sometimes. Deciding to do it is a significant first step, but it does take a little work the first time you do it.

Don’t worry though – we’re here to help. We help clients every day and look forward to assisting you. Send us a message from our Contact Us page, or feel free to call us at 714-663-8000. We will talk to you soon!


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