Knowing what you want out of retirement: You’d think this is obvious, but many seniors near retirement can’t articulate their vision of their golden years and those who do don’t know how to make it a reality. One thing is for sure, you need to be thinking about this no less than 5 years from your retirement date. You have to have a retirement plan that addresses your finances as well as your vision for your golden years.
Taking Key Risks Off the Table: There are proactive steps you can take to circumvent risks that can derail your retirement. The new retirement paradigm is not the accumulation of assets, but the maximum income derived from them. And that includes lifetime guaranteed income annuities with a cost of living adjustment to pay for your essential obligations and discretionary spending. It also includes defending your assets against long term care costs.
Divide and Conquer Approach: The newest methodology in successful retirement planning is dividing your assets for income and growth. This is a new partitioning approach, assigning dedicated assets to generate guaranteed lifetime or period certain income and grow the remaining assets for legacy, charitable gifting and enlarging your estate.
Buy Income and Invest the Difference: This is a subset of “Divide and Conquer.” Purchasing blocks of income is a relatively new retirement strategy based on lifetime guaranteed income and using the remaining portion of your portfolio for your investment positions to grow your estate.
Core Measurements: There are four core indicators or gauges that can help you navigate retirement; just as a pilot navigates in low to zero visibility by monitoring his instrument panel, it’s necessary to gauge your net worth, liquidity, reliable income and withdrawal rates along the way.
Understanding the Happy Factor: Lifestyle choices, living standards and disciplined saving methods all factor into the equation of a “happy” retirement. A happy retirement is one based on cash flow prosperity and not money tight scarcity. If your income is fixed with no probability of increase, then debt and lifestyle reduction needs to occur before retirement begins.
These are the key elements in retirement thinking. Applying them to your own situation can help you begin the process of addressing your retirement.