Broker Check

Retirement Income Planning

In the planning process, a comfortable, dignified retirement is almost always first on the priority list. Whether you are already there or getting close, nothing matters as much as having enough to live on your own terms. Getting this part right affects every other financial goal.

The math can be scary but it is also your friend. In rough terms, the object is to have enough cash-flow producing assets (and / or iron-clad pensions) to support your lifestyle plus inflation through what could be 30 golden years. In the discovery process we look at all your; rentals, raises, savings, holdings and rich uncles. We also have to handicap the probabilities and try to improve them if we can.

The computer does the counting and pulls no punches. We start with the number you need to live on and subtract pensions and a Social Security estimate.1 The difference is what your investments need to produce. Is it reasonable? If not, do you save more, spend less, work longer?

A fourth possibility is to earn more. With modern medicine, the days are long gone when you can leave your assets in low-yield savings accounts and not lose purchasing power. Negative real return (earnings minus inflation) will eat through all but a very large stack of cash. Even if you squeak by, you won't do your heirs any favors. Your investment objective may go from savings to spending but the investment mix likely needs a meaningful growth component to cover cost-of living hikes.

Just as this is the #1 goal for most people, it is also the most stress-relieving when you have it in front of you even if it isn't as luxurious as you hoped. The results will suggest a positive course of action. Action is better than waiting and worrying.

1 The default amount is the Social Security current estimate. We can adjust that amount up or down depending on your comfort with the system and we can run alternate scenarios at different age thresholds.

For more on the pros and cons of financial planning software, please have a look at On Financial Plans in the Whats Different tab.

Download this article as a PDF (adobe reader required)