Pre-Retirement and Retirement Income Distribution Planning
One of the biggest mistakes you can make is going into retirement without a plan in place. Failure to plan is one of the most common reasons why retirees run into problems. When you make a mistake in retirement-it’s a lot harder to recover.
The transition from accumulating retirement assets to taking income from the accumulated assets in retirement requires thorough and the well-planned preparation as well as a fundamental change in mindset. During the accumulation phase of retirement assets, the primary goals are to maximize retirement savings and investment returns.
The distribution phase can be much more complex depending on the size of portfolio. The primary objectives shift from accumulating to protecting retirement assets and maximizing retirement income. It requires a long-term planning and implementation of the assets protection strategies, managing and monitoring withdrawal rate and continuing to grow assets while taking in consideration inflation and tax issues.
The income distribution planning is the process by which the assets you accumulated as you were planning and preparing for retirement are paid out to you through well balanced investment choices with complementary risk management and growth opportunities. Because of the changed investment objectives, time horizon and risk tolerance-investment vehicles used during the distribution phase are usually different from the investment vehicles used during the accumulation phase.
The assets from which you want to create a reliable stream of income during retirement face economic, interest rate and market risks. The risk management strategies require long term planning. It is of paramount importance to correctly position your assets prior to your retirement. Depending on the size of their nest egg, one of strategies I use to help my clients create a sustainable stream of income during their retirement is to position their assets into a series of well time-segmented and inflation-adjusted investments that are designed to provide income for their lifetime.
In working with my clients, I always address the risk that inadequate health care can create in retirement. Well-defined retirement life plan includes not only income strategy but also health care strategy. For many people, health care can be a substantial part of their retirement expenses and one single factor that can cause chaos to their finances and to their families.
People that have a good financial life plan are working on things that bring meaning and fulfillment in their lives.
If you are within five to ten years of retiring, or have retired within the last five, I will be happy to talk to you about creating your customized retirement life plan.