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Retirement Requirement

Retirement planning is a lifelong task. First you want to “get” to retirement, then you want to “enter” retirement, and finally you want to “make it through” retirement. Each step of the way has its own financial tools with their corresponding strategies. Fortunately, or unfortunately, depending on how you look at it, there are many financial tools and strategies that can be looked over and then implemented in the quest for financial retirement success. Bear in mind, with all these financial tools vying for your attention to achieve financial retirement success, there are still basic principles that need to be followed to ensure that your financial plan is solid and will last as long, or longer, then you do.

In addition to income and inflation, there are other issues to consider: Medicare and Healthcare costs, Long Term Care, replacing income in the event of the loss of a spouse, helping parents or children, RMD's, Tax planning, avoiding probate, and so on. Even though not addressed in this article, they do play an important role in regard to how money is positioned to ensure true success in your retirement.


When planning for retirement, the first goal is to have enough assets accumulated to provide income to live the way you want to live. Not all assets will be used for the same purpose nor at the same time. All monies need to be categorized. Common categories for income are: Money you need today, money you need tomorrow, and money you may never need.

When you were working, if you spent all your income every paycheck, you would have nothing left for the future. For most of us, it takes discipline to spend what you need, have a little for fun, and then put the rest away to provide for a better future. Sometimes, however, it may be easy to forget the one thing that helped you save all those years is the one thing still needed in retirement; that is income. Without income there is no retirement.


One of the biggest issues that a retiree faces is getting the foundation to secure the needs of retirement. For most people, social security is the first foundation piece of retirement. The peace of mind that comes from knowing an expected amount of money, each month, will be in your checking account cannot be understated. Some people still have pensions, another security that gives the assurance of monies hitting your bank account each month. Pensions are very desirable, but are more and more obsolete. You must provide the remainder of your desired income streams yourselves.


Making a stream of income can be very difficult for people. Studies show people value a lump sum at 2.5 times higher than the income stream their money is currently producing. Another reason involves control. Some people see the “pot of money” accumulated and when they put it to work creating income for retirement security, they feel they must give up control of their money to provide the necessary income. There are numerous ways to create income: Rental real estate income or deeds of trust, stock or bond dividends, annuities, interest income, certain types of cash value life insurance, etc. These tools have a tradeoff between income and liquidity, if you are to accomplish your income goal properly.

Each income tool also provides a set of pros and cons that accompany it. Some provide guarantees, others don't. Some are riskier, some conservative, and some are principal protected. The bottom line is that income is essential and the foundation of every retirement plan. Without a way to obtain consistent and reliable income, the historical statistics show your chances of your money living as long as you do greatly diminishes.


Once the basic needs are met for income, the

goal is to have your income keep pace with inflation. You can obtain this by the same tools used for the initial income. You may also choose to keep this option more liquid, but again the strategic choice goal is to provide for additional income as costs of goods and services increase. In addition, you always want to keep taxes in the back of your mind. The goal should be to not overfund your income, because you will end up having to pay more in taxes. You only want to pay taxes on what you need rather than creating an additional tax bill by creating unneeded income.

Another reason to protect your investment against inflation is to supplement income shortfalls. You may need more money one year than another. You may want a new car or something extra or a more expensive vacation. This hedge is to provide flexibility for you to take some, a lot, or no money in any given year.


Once inflation adjustments are handled, you can turn your attention to excess funds providing for your long-term future and your loved ones. Typically, these investments are liquid and fully accessible and may have growth. Concerns over passing tax advantaged or tax-free assets on to heirs is also a common goal. We also find that as a person ages, it’s not uncommon to feel more comfortable with more principal protection and guarantees in lieu of strong growth potential.

The bottom line is such that it is difficult and near impossible to plan for the future if your present is not in good order. If you don't have sustainable and reliable income now, and a plan for future income, it is difficult to know how to invest for something 15 or 20 years down the road. This is what our Retirement Roadmap Plan does. If you need a retirement plan – A Retirement Roadmap, or an update, please call to schedule a time to come in.

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