Retirement income planning

Retirement Income Planning

Several things come to mind when I think about retirement and one of the major issues would be running out of money. Setting up financial matters to address this risk makes a lot of sense for some of our clients.

Having some base income that is fixed can make a lot of sense. We often times like clients to think of their money in similar terms to investing during the accumulation phase of their lives. During accumulation nearly everyone has heard the mantra; don’t put all your eggs in one basket. We like this analogy and feel it is appropriate for retirees as well. Think of your money like you have different baskets attempting to accomplish different objectives. One basket might be “fixed” and include things such as pensions, CD’s, fixed annuities, cash value of life insurance that are fixed, savings accounts etc. Basket two might be things that are dependent on a market which might include bonds, stocks, alternatives etc. Lastly, basket three would include things that might be required to accomplish what one wants after they pass away. This could include life insurance death benefit proceeds, house or something else one would more than likely not spend during their lifetime. If you have a nice balance of all these different types of assets often times a retiree can be confident knowing that they do not have all their eggs in one basket. Assuming these things are allocated in a diverse enough manner!

We actually view retirement such that we view investing in any market; risk management is key. Risk management should not be limited to the normal risks that everyone plans for such as stock market risk; we really feel that everything has risk. Stocks, bonds, interest rates, currencies, financial institutions etc. We feel that if any of these are not planned for it could leave a retiree up a creek without a paddle.

Investing involves risk including loss of principal. No strategy assures success or protects against loss. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.