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Michael J. Fitzgerald, CPA/PFS, CFP®, MST is one of the worlds authoritative leaders on tax and investment planning for real estate retirement services. He is known as the "Real Estate Advisor", Pre-retirees will walk away from his presentations energized with the newfound knowledge of how to customize and execute their own Wealth By Design Retirement Plan to effectively meet their retirement goals and Transition into a well earned retirement.

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Why Do I Need A "Wealth By Design Retirement Plan"
to Help Me Plan For Retirement?

Any successful individual needs to follow a long-term financial game plan. Your Wealth By Design Retirement Plan will outline and evaluate the most important aspects of your retirement planning opportunities and will then provide you with a specific roadmap on how to achieve your long-term retirement goals, by replacing 100% of your income within a 5 year period.

A good Wealth By Design Retirement Plan starts with your most important "Life Goals", for example, "Can I really retire within 5 years, replace 100% of my income, help send my grandkids to college, give back to the organizations that I love, provide for my wife, and leave a tax free estate to my kids and grandkids?" Yes! Through our program, we focus on the goals and then identify the tools necessary to help you make sure that the Yes stays a Yes, or to help you identify which goals may need to be adjusted. The great thing about our program is you get to decide which goals are the most important to you. Once we know what you want to accomplish, we can design a degree program that will guide you through the next 5 years to retirement.

If you remember, way back when, when you showed up to college, you were new to the whole higher education universe.  Back then the whole process seemed overwhelming, how were you ever going to be able to get done and get that first job? One of the first things that the university did after you were accepted, was to have you sit down with your academic advisor, who was there to help you focus on the end result, which was graduating with a degree by breaking the entire process into bite size chunks. This was an end focused goal, set to take less than 5 years to transition you from straight out of high school into a productive member of society. The people that created the higher education system understood that you needed to break the program down into bite size bits of learning, otherwise if they tried to teach you upper level courses as a Freshman, you would have been totally lost, because you did not have the basic foundation in whatever field that you were planning to study. So they started with the end in mind, (that being graduating with a degree in….), and to help you focus on your short-term goals, they broke the academic year into 4 years, (Senior, Junior, Sophomore, Freshman), each year was then broken down into two semesters and the semesters were broken down into two parts and the two parts were broken down into the core individual classes and the individual classes were broken down into sections and the sections were broken down into chapters.  By employing this strategy they were able to train you and expose you to new information at a rate that you could understand and retain, as well as build upon.  This is the same methodology that is going to be needed to get you ready for retirement.  

Through the use of the end goal, which was graduating in 4 years, a plan could be developed to train you for the next phase of your life. That plan was called a degree plan, it laid out the foundations of your goals and dreams by saying in 4 years, I will graduate with a degree in ………………………………! You fill in the blank. Once you selected your degree plan, you had to take the foundation courses necessary to prepare you for the more complex topics in the upper levels. As this process was going along, you signed up for certain classes in certain order, you could not move onto the next class level unless, you could demonstrate that you had gained at least the minimum requirements. If you struggled, you retook the class. You did not give up; otherwise you would not be where you are today. I have multiple degrees and they did not teach this information in any of the classes that I took while in school.

Talking to most people they did not have any classes that showed them how to organize their finances and plan for retirement. What they learned was through trial and error or they were taught by someone that did possess the necessary skills, or the wealthy one found advisors to do it for them.  Think about what you do for a living, it took you years to acquire the skills necessary to do what you do at the higher level.  If I tried to do what you do, I would struggle, until I either obtained the skills or experience necessary to perform your job at such high level.

What I want to show you is that trying to project out over the yield curve is very difficult.  Figure, if countries and investment banks can not do it, how should you expect that you would have the skills or access to the information necessary to make those decisions? Can you tell me with any degree of certainty that you will know what the economic landscape will look like in 30+ years? No one can, that is why most multi-national companies only use a 5 year business plan. Now they do have underlying core long-term goals for their companies, but having the flexibility to adjust your plan as the circumstance change gives you a lot more confidence, then being committed to a 30+ year “Buy & Hold” program. How are you going to determine the necessary assumptions needed to project out a 30+ year retirement, with the underpinning of the core inflation rate to make it look like more in line with expectations, when in fact the four most appreciated items have been taken out of the core basket, (Energy, Housing, Higher Education and Medical Care). So, if inflation is hire than you are projecting, it means that the value of your portfolio will decrease at the same rate as the increase in any unexpected inflation.  At a 3% inflation rate a portfolio will loose 50% of its value in less than 24 years, at a 3.5%, a portfolio will decrease by have in less than 20 years.  The more realistic value of inflation in today’s dollars is currently around 5.5%, or 2.5% higher than what you are using to plan your retirement with, under these conditions, your portfolio will be reduced in half ever 13 years.  A Million dollar portfolio will be worth only $500,000 in today’s dollars in 13 years.  So in less than 30 years your Million dollar portfolio will be worth $250,000 in today’s prices. Assuming that you fully annuitized your portfolio, the most that you would be able to generate is a 5.5% return for life before any fees, taxes and “Rule Of Thumb” inflation so your real economic return is equal to negative -4%. Let’s calculate how long your purchasing power will last including these additional costs.

$1,000,0000 = For every $100,000, you will earn a 5.5% return before fees, taxes and inflation if annuities are purchased. So your retirement paycheck will be $55,000 gross. Now assuming that you are in the 25% marginal tax bracket, you would have taxes due of $13,750. Then we would have to assess the internal and external costs of the annuity in the form of fees, so you would spend another 2% or another $1,100 in management fees related to the commission products inside the annuity. Then when you adjust your paycheck for inflation and cost of living each year, you would loose another $3,025 in purchasing power each year. Your true take home pay in year 2 would be equal to $37,125. So in thirteen years your retirement paycheck would be worth $18,563 in today dollars, in another thirteen years your retirement paycheck would be worth $9,281. Can you imagine being only 91 year’s old living on less than $10,000 a year? When you started retirement, you were a Millionaire.

Now let’s look at that same example, but this time instead of putting your money into an annuity. Let’s assume that we invest 100% of your portfolio into a normal 80/20 Bond/Stock split that most people think that they need to do in retirement. We will assume that 80% of your portfolio is in bonds and 20% of your portfolio is invested in stocks. This portfolio should give us an 8% annualized return over a 30 year period. Now calculating the return, on an original $1,000,000 portfolio starting at age 65 in retirement, that would generate 20% of its return from the stock market and 80% of its return from the bond market. Assuming that the stock market gives you the normalized 10% return over the next 30 year period. The portfolio would generate $20,000 a year in dividends and capital gains related to the 20% stock portfolio, assuming that the portfolio was re balanced and all dividends were distributed. The bond portfolio would generate approximately $40,000 in interest income each year. This would give you a gross retirement pay check of $60,000 a year. Then we would apply the internal and external costs needed to generate this return, so you would have to spend an additional 25% in taxes or $15,000 a year. If mutual funds are used you would have about a 3% management and marketing fee or $6,000 in either reduction of principle or this amount would come out of your current distributions. If an advisor is used you would pay anywhere from .5% and 2% for management of your portfolio. Let’s assume that your advisor only charges you 1% of the $1,000,000 portfolio or $10,000 a year. You can either pay this out of your portfolio principle or out of your current retirement distributions. Now we have to apply the dreaded inflation rate of 5.5% or $3,300 loss of purchasing power each year. Let’s calculate you year 2 take home retirement paycheck. You real take home would be $25,700. Assuming that you can maintain your current $1,000,000 balance and do not dip into more of your portfolio, than the current income generated from it, you would be able to take home $25,000 a year. If you tap into the $1,000,000 principle, this amount will go down faster than the return will go up. When they cross you are out of money and on the streets.

As you can see there is a break even hurdle that you must overcome and using only two asset classes will not give you the required rate of return necessary to generate a very positive retirement outcome.

Your two biggest concerns in building modern retirement income is:
1. Inflation
2. Taxes

When you work, your salary is adjusted for cost of living each year, through yearly raises, otherwise you would quit and go find a better paying job. While in retirement, you are having to convert your assets into streams of income, without running out of money in the process. Figure for every year that your portfolio losses money, but you still keep removing the same or even higher amounts, your start to deplete the principle. The portfolio either needs to take on more risk (spend more of your risk budget) to generate even higher real returns, or you need to adjust your withdrawal rate. Most people live at 110% of their current income lifestyle, which is why so many Americans are carrying such large amounts of revolving credit card debt. You are spending more than you make, eventually you need to pay it back, either buy tapping into savings, using the equity in your home or being forced into financial ruin.

As you transition into retirement, you will try and follow an older more outdated retirement model – “The 3 Legged Stool”.

Under this retirement model there were three necessary parts:

1. Company or Government Provided Pension & Post Retirement Health Care Costs
2. Social Security & Medicare
3. Personal Savings or Investments

And if that was not enough, children picked up the slack either by sharing some of the costs, or allowing them to live with them to save money.

Throw in a rather limited life expectancy and you could eek your way through a low fixed income retirement. You knew that you always had checks coming in the mail from your pension and from the government. You could always dip into your personal savings for trips and gifts.

Because you stayed at the same company for 30 years, they were going to let you stay in their health care system and you would only have to pay the co-pay.  This is a benefit that many Pre-Retirees today do not have, therefore they have to account for these costs out of their fixed income.  

Does this sound like your retirement plan?
Does your company give you a pension?
Do you have post retirement health care benefits?
Is Social Security enough for you to live on?
You must have lots of money saved for your retirement to be able to replace these great benefits?
You do have a lot of money saved, don’t you?

Assuming you have a husband and wife each making $50,000 a year before taxes, they would need to have at least a portfolio $1,250,000 stashed away to be able to replace the $100,000 needed to maintain their current standard of living. Assuming that they maintained an 80/20 split and got an 8% return during retirement and did not increase the $100,000 retirement paycheck or dip into principle.

So by scrimping and savings for 30 years assuming you started right now you would have saved before any market returns $450,000 in your 401(k) plan, assuming you started today and max ed out your plan. Now let’s also assume that you qualify to make any contribution to your IRA, after thirty years you would have $120,000. That would give you a total of $570,000. If adjusted in today’s dollars it would be worth $143,000. Assuming that you only earned the rate of inflation.  Any Fees or taxes would have ripped through your portfolio.

Let’s look at your break even point = To maintain the required $100,000 year distributions, adjusted for inflation each year by 5.5%, plus 2% for taxes and 2% for management fees. You would need to make 9.5% just to break even. You need to make another 8% to be able to withdraw the $100,000 retirement income. That means that your real required rate of return is 17.5%, as you can see a 5.5% annuity or an 8% 80/20 portfolio will not give you the required return necessary to replace 100% of your income. Even if you went to a 100% stock portfolio and invested in the riskiest asset class over a 10 year period the most you would expect to receive would be around 15%. That is assuming that you can handle loosing 20% - 30% of your portfolio ever 3 years.

As you can see both of these do not seem like sound retirement principles and because the system is skewed to favor the educated. Because the salesman that sold you on these products will be long gone before you run out of money, or you will quit them and move on to be someone else’s problem. Figure they got paid regardless if you made money or lost money. Because you paid them a commission, and they will most likely push you into the flavor of the month (A Product) that pays the highest commission or offers them a free trip. Does this sound like the best place to get your retirement advice from?

Now let’s look at other advisors that want to accumulate but do not want to distribute. Figure they make money by having you save money. When it comes time to withdraw those funds, every year their fees go down. Do you think that they are going want to do the same amount of work, or more, if every year their pay check goes down? If you advisor is over 50 years or older ask them if they ever want to retire? Most will tell you that they do not see themselves retiring anytime soon. That is until, you start wanting to take from their check to fund your retirement. Let’s assume that the relationship goes on for only another 20+ years. That means that if your advisor is 50 years old right now and eventually dies or retires at age 70 1/2, you would be 65 entering retirement and now 85 years old looking for a new trusted advisor, twenty years later. Are you really ready to have to go out there and find a new advisor, how will your spouse be able to find someone that can make sure they are not out on the streets? What if it is your spouse, do you think that they are going to be able to search through the group, when she is 85 years old? I know I would not want my wife to have to deal with that stress.

Another problem that you will have is the population distribution, there will not be as many advisors around in 20 years. Figure there are 77 Million Baby Boomers, of that how many of them are 50+ years in age that could potential be your advisor. Now as they either die off or retire there will be a huge shortage of qualified advisors when you need them the most, during your retirement distribution phase. There are only 26 Million Generation X, what percentage of those will be qualified advisors 20 years from now? You do the math. Accumulation is easy and that is why anyone can become a stock broker and sell annuities, it is retirement income replacement that is hard.

What Is The Solution?

It is not about how much you make, it is about how much you take home. The Wealth By Design Retirement Plan will then guide you through the process of examining the key aspects of minimizing your taxes and investing the savings to supercharge your retirement income and retire in 5 years or less.

The importance of Wealth By Design Retirement Plans cannot be emphasized enough. Pre-Retirees age 45 – 65, who meet certain income and net worth requirements, who would like to read more about the value of having a business plan for your retirement may download a free Report, “13 WAYS TO CUT YOUR TAXES ON YOUR 2008 INCOME TAX RETURN” or if you register for one of our Free Webinars, you will also receive our valuable white paper, “How to Finance Your Way To Retirement.”

Retirement Planning Options

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Fitzgerald Financial Partners, and their Wealth By Design Retirement Plan is the leading real estate retirement services company in the U.S., employing, tax minimization planning systems for owners, brokers, managers and real estate investors who what to do 1 simple thing, replace 100% of their income within a 5 year period and transition into retirement.

Do not confuse wealth planning with goal setting. Anyone can set goals, but professional owners, brokers, managers and real estate investors build real wealth, through multiple facet plans. Wealth and retirement planning is the road map that calculates how to reduce your taxes and invest the tax savings to supercharge your retirement accounts.

Most pre-retirees are recognizing that working as an investor is a tough business, and should not be treated as a hobby. They must deal with the pressure of making sure not to loose all of their hard earned money, but at the same time take on enough risk to outperform inflation and reach their required rate of return. I can not believe that some pre-retirees try and do this on their own. But few have ever worked with a CPA/PFS, CFP®, MST who designs custom wealth & retirement creation plans designed with the most important aspect of retirement, 100% income replacement.

Even Pre-Retiree, who value setting goals and defining specific objectives for their businesses, often lack the time and expertise to develop a comprehensive wealth & retirement distribution and tax minimization plan. The current plans available, only deal with some of the asset classes that are available, stocks, bonds and cash. These asset classes are great to help diversify your portfolio risk, but do not generate the returns necessary to follow Pareto’s Principle, which states, “20% of what you do generates 80% of your income.” Does 20% of your plan generate these kinds of returns? Maybe it is time for a new plan!

What Plan is right for Your Retirement Goals?

There are three different levels of the Wealth By Design Retirement Planning Service: Silver, Gold and Platinum. Each version of our planning platform, is designed to solve specific needs related to our Pre-Retirement clients, based on their own individual psychological profiles and focused retirement and life goals. Fitzgerald Financial Partners believes that everyone’s dreams and goals are unique, and therefore so should the plan that is right for them at the right time.

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The Silver Fitz Tax Plan is designed specifically for Pre-Retirees who want the plan, but want to do it themselves. Wealth By Design Retirement Plan Silver will focus you on your goals and the needed return necessary to reach those goals. You will be able to identify if what you currently have will be enough to reach retirement. Pre-Retirees quickly and easily make a Wealth By Design Retirement Plan and follow the quarterly reminders to achieve their long-term wealth accumulation planning goals.  This is the basic building block on all of the Wealth By Design Plans and involves either a piece meal approach or you can utilize the full 3 phase process.  

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The Gold Wealth By Design Retirement Plan is designed for Pre-Retirees who want someone else to handle their daily investments, and provide quarterly progress reports and access to our training library.  This process is similar to working with a “Fee-Only” Registered Investment Advisor.

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The Platinum Wealth By Design Retirement Plan is the latest version in the Fitzgerald Financial Partners, planning suite and is focused on designing retirement income replacement services, while employing strategic tax minimization plans for achieving maximum wealth accumulation in a relative short period of time. This service is designed for clients that want someone to do it for them, as well as educate them and guide them to retirement. Additionally, Platinum has powerful built-in what -if scenarios, to see the effects changing markets might have on your long-term goals and portfolios.  This program is by invitation only, based on success factors within the two other levels.
After your evaluation period in the Gold level, you will be notified if your application to the Platinum level has been accepted.  This program is limited to only a certain number of Pre-Retirees that have made it through the process and have shown that they want to retire, and they will do whatever it takes to get there.  Just like in college.

Developing a Good Quality Wealth By Design Retirement Plan

The Silver Wealth By Design Retirement Plan is a simple advisory appointment designed to develop and test your goals to your plan.

• The Wealth By Design Retirement Plans provide a goal tested plan, instead of trying to determine a number, you will determine the required rate of return necessary to not outlive your assets during retirement.  You will also see what your financial grade point ratio will look like based on the progress in your plan.

Our program will walk you through a simple application process to guide you through the preparation of your 1 time plan.  This is not a typical 70+ page application, making you detail out all of your assets and budget, but instead only has 5 pages and can be done faster and more effective by focusing on the most aspects of any plan.  

The Platinum Wealth By Design Retirement Plan allows you to experiment with different, what-if scenarios.  This programs, main focus is on getting you over the 100% income replacement threshold, within 5 years. 
The Wealth By Design Retirement Plan enables you to make intelligent and informed business decisions about your retirement outlook, and how to test your plan to see if there is a probability of outliving your assets.

In association with any plan selection, we offer a 10 minute online consultation.

Isn't it time you maximized the return on your investment of time, money and energy in your retirement planning process, and with our 100% Money-back Guarantee on the Silver Wealth By Design Retirement Plan, what do you have to lose.

If you are interested in applying for this unique program, please register for our upcoming webinar;

"Do You Have The Desire To Retire?"
" Financing Your Way to Retirement !”

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are Free Informative White Paper

"Financing Your Way To Retirement !"
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