Retirement Planning


Retirement Planning Overview

Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, estimating expenses, implementing a savings program and managing assets. Future cash flows are estimated to determine if the retirement income goal will be achieved.

The Accumulation Phase

In the Accumulation Phase we determine the size of our nest egg, the total balance of your assets heading into retirement.  The size of your nest egg largely influences how much you will have available to spend in retirement, which in turn influences the level of income that you can confidently sustain for the rest of your life.  In this phase, we are saving for that day in the future when our assets have to combine with our Social Security and pensions to replace our income entirely!

The emphasis is asset allocation prior to your retirement, balancing safety and growth in a way that maximizes the accumulation of wealth while still allowing you to sleep at night.  This means taking the time to review your situation to ensure that your current portfolio allocation is properly aligned with your individual investment time-horizon, financial objectives, and personal risk tolerance.

The Distribution Phase

In retirement, what goes away?  Your income!  The Distribution Phase starts when you begin relying on withdrawals from your retirement assets to supplement your income and fill any gaps each month.  When we begin to live on withdrawals from our investments, the risk tolerance of our income generating accounts often changes.  In retirement, the intended use and the time horizon of an asset are key factors in understanding which investment strategies would be appropriate to consider for a particular asset.

As such, the emphasis for your portfolio in this phase becomes income allocation – positioning your assets to ensure that you have enough income streaming in each month to satisfy your expense budget now and throughout the entirety of your retirement.  Remember, reliable income is the outcome that matters most in your Golden Years!

The Generational Legacy Phase

The final phase of your retirement is based on the legacy you leave and only begins after you pass away.  To some, this is the an incredibly important, primary focus.  To others, it is the last piece of the puzzle to address.  But if we successfully navigate the Accumulation Phase and the Distribution Phase, leaving us with excess assets left over at the time of our passing - who would you rather receive the fruits of your labor... judges and probate attorneys?  Uncle Sam?  OPM?  Or would you rather your remaining assets go directly to those individuals and organizations you most care about?

We cannot take our money with us after our time is up -which is why you never see a hearse followed by a moving van.  So when considering this phase, listen to the old saying, "Riches are acquired in a single lifetime but wealth is passed from generation to generation."