There Are Basic Approaches to Retirement that Can Deliver Real Results

“Measure twice, cut once,” is an age-old axiom that directly applies to what some financial advisers call “the preferred way” of retirement planning. In short, “the preferred way” maximizes income and considers many factors, like taxes, that can impact the goal of a long and enjoyable retirement.

Followers of the “the preferred way” will need to:

Calculate: Using historic data, determine the amount of money needed to retire.

Evaluate: Assess their readiness to retire based on all income sources and their desired lifestyle.

Compensate: Understand that adjustments are needed to even the best-laid plans. Markets and values do not move in a straight path, and asset distribution differs greatly from asset accumulation.

Mitigate: Take measures to offset inflation that can erode buying power. Social Security cost of living adjustments may not occur annually as they have in the past.

Allocate: Assign resources to an annuity that can produce guaranteed lifetime income, regardless of the retiree’s longevity. Recent mortality tables project that

65-year old males and females have a 50% change of living to 86 and 88, respectively.

Dedicate: Whether it’s asset allocation or deciding when to begin taking Social Security, plan to protect the surviving spouse, who must live with the consequences of any age-based decision.

Create: Tax-free components can be built into a retirement plan through life insurance. When properly structured, interest income can be accessed tax-free without impacting Social Security, and the death benefit may pass tax-free to the beneficiary as well. By sticking to core values like income maximization, protecting the spouse, and seeking a long and enjoyable life – instead of consuming the next shiny object – retirees can take comfort in a measured perspective consistent with an increasingly long lifetime.