We’re only three weeks into the New Year and hands down, almost every potential client I’ve spoken with so far is concerned about one thing and one thing only - retirement planning. More specifically, they want to know, based on their current financial picture, if they’ll be able to maintain the lifestyle they desire when no longer working for money. That, ladies and gentlemen, pardon the cliché, is the $6 million dollar question on many a boomers mind these days.
Where most of us do really well is on understanding and executing on the accumulation phase, such as saving and investing X amount in your IRAs, 401ks, 403bs, each year. We get that concept. Where things become murky for many people is when you get to the income distribution phase of retirement planning. This is when you need a long-term strategy to fill the gap between your social security and possible pension payments and your lifestyle expenses. To do that, you ask the following questions:
- How much can you safely withdraw each year from your investment portfolio?
- What’s the rate of return you’re assuming with your portfolio?
- How should you develop your investment strategy?
- Do you withdraw your cash monthly, quarterly or once a year?
- Do you withdraw the same amount each year or will it depend on your investment returns?
- What’s the defensive strategy to preserve your capital if inflation starts to increase rapidly?