According to the 2011 Transamerica Center for Retirement Studies Survey, the single greatest fear among retirees is running out of money before running out of life! With the ever changing retirement and economic landscape, many retirees feel forced to manage their portfolio in a manner which produces enough income to finance their current lifestyle. But what if they draw too much and run out of money before running out of life! It can happen. Advisors used to tell retirees they could withdraw 6-8% each year with a reasonable chance of not outliving assets, but they lowered that to 5%, and then 4% and some recent “experts” say 3%! Withdrawing money from investments without a written plan, and/or private pension-like options, is likely the #1 cause of depleting retirement assets early. Our 3-Step Review will help you understand YOUR retirement number!
... your net worth! It IS … how much income you need to enjoy retirement. This number should allow for a lifestyle equal to or better than pre-retirement years. Planning for inflation is critical as these outside factors could cause “your number” to go higher during the retirement years. Planning for this lifetime income is the #1 objective for most retirees.
Inflation affects the money we spend, not the money we accumulated. Far too often, retirees erroneously think they must assume more risk to get a higher growth rate on their money to "hedge for inflation." Consider the possibility; inflation could be 3-5% over one’s retirement years. If one’s monthly income is not adjusted accordingly, there might not be enough per month on which to get by. An Inflation Laddered Income Plan or a Tax Advantaged Plan can help create a plan for lifetime income!
An Inflation Laddered Income Plan provides a plan for lifetime income. The goal is for income that cannot be outlived and allows for income adjustments due to future inflation. For example, if $2,000 a month is needed from your portfolio, initially, at a 4% inflation rate, one would need $2,433.30 in 5 years. In 10 years, the basic need rises to almost $3,000 per month! We teach our clients how to invest the portion of their retirement portfolio in insured accounts so as not to lose principal in a market downturn. This method delivers a retirement paycheck for life while freeing up excess investment dollars to invest for emergencies, opportunities, extra income to cover inflation and legacy building! To learn more about the I.L.I.P., call and request our 3-Step Review.