The Importance of Strategic Income During Retirement
One of the biggest threats to retirement wealth is withdrawing too much money from a shrinking nest egg, especially during times of market volatility. A formalized monetary distribution plan is a crucial necessity in helping ensure you don’t outlive your money. The plan needs to mitigate timing and inflation risks, and build protection against longevity risks.
- Timing Risk: Understanding how markets can impact your nest egg during your working years is a very different story once you enter retirement. When we retire and start drawing income from our investments, the annual investment returns (ie. interest earned or lost) can really impact how a portfolio will perform over the long term. Especially if you happen to encounter turbulent markets during the early years of your retirement. We can help mitigate retirement timing risk by understanding your risk exposure and choosing the mix of investments designed to help limit your risk exposure.
- Inflation Risk: The effect of rising prices can threaten your standard of living when the impact of inflation starts eating into the value of each dollar. Inflation risk is understanding how much your dollar will buy today versus how much it will buy in 10, 15, or 20 years. At a 3% inflation rate, a retiree loses 25% of their purchasing power every ten years.
- Longevity Risk: This risk is usually the easiest to understand: “How long am I likely to live, and how do I make sure I don’t run out of money before then?” With life spans getting longer and longer, it’s especially important to ensure you have a strategy designed to create a pool of money you can’t outlive.
Building Your Comprehensive Retirement Income Plan
We’ll coordinate with your legal and tax planning professionals so we have a complete picture of where you are today. We’ll then work with you to determine your expectations for the kind of lifestyle you expect to maintain during your retirement years. With a deep understanding of all the various risks involved, and incorporating the various components that will comprise your retirement income stream, we’ll put together a comprehensive plan tailored to your specific needs.