Many retirees are ending up with what we call an income shortfall in retirement. That’s where the amount of assets they have saved up is simply not enough to cover their lifestyle and the expenses they’re going to incur over their lifetime.
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The Problem: Income Shortfall in Retirement
The reason why retirees are experiencing this shortfall is because all of our lives we’ve been conditioned by the big banking companies, Wall Street, the mainstream media that assets and rate of return are the key to a successful retirement.
Put your money in the market and build up your assets as much as you can. Get the greatest rate of return. If you lose money, throw more money at it and constantly chase for higher returns.
4 Key Retirement Risks
When you take this ASSET approach, you expose yourself to the four key risks in retirement:
- Longevity: (outliving your savings)
- Stock Market: (losing your money due to stock market volatility)
- Taxes: (likely your biggest retirement expense)
- Inflation: (losing purchasing power due to increasing prices)
Why you Need an Income Plan
That’s the problem. We believe that the key for a successful retirement is not through an asset plan, but rather an INCOME plan. An income plan that protects your savings from the four key risks during retirement.
We’ve identified five key areas that if properly structured and all five working together, it helps our clients focus on the things that matter most in retirement.
Things like seeing your grandkids. We want to make sure you have an income stream that you’re able to take that trip to see them.
If you want to see the Vatican, we want to make sure you have a plan in place that helps you check off those bucket list items and helps you spend with confidence, REGARDLESS of the economy. We want you to have confidence in any economy.
And all of that comes down to having a cohesive plan. And through our five-step proprietary process, we can help guide you on the path to where you want to go.
Watch the quick video below for a step-by-step guide to building a successful retirement and the 5 critical areas to focus on to protect it.
Retirement Income Framework
The Retirement Income Framework is our process to help you achieve your retirement goals.
Clients who work with us finally have peace of mind and confidence when it comes to retirement and are living happier and healthier lives because of it.
Step 1: Identify
We first need to determine your current financial status before we do anything else. Think about this as your “retirement junk drawer”. What accounts you already have in place and what are your expenses on a monthly basis?
Two important questions to ask yourself are:
|What do I need my retirement income to do?||= ESSENTIAL EXPENSES|
|What do I want my retirement income to do?||= DISCRETIONARY EXPENSES|
Your essential monthly expense is what I like to call your “Protected Income Number”. Making sure you have a protected income stream coming in every single month that covers this amount should be your top priority in retirement.
Step 2: Protect
Now that you’ve figured out your expenses and identified your Protected Income Number, you then need to make sure you have a protected income stream guaranteed to come in every single month that’s going to cover that number.
There are three options for guaranteed protected lifetime income:
- Social Security
Our plan will provide a recommendation of when to start Social Security to maximize your benefits.
Knowing that your essential expenses are covered by protected income provides peace of mind. This allows you the option to go for more growth with your other assets.
Step 3: Reduce
Income taxes are one of the largest expenses you will face in retirement. Even if tax rates stay the same, considering the amount of debt the United States has accumulated, your three largest tax deductions may be eliminated when you’re in retirement.
- Your house could be paid off by that time so that mortgage deduction is gone.
- Your children have likely moved out of the house, so there goes the child exemptions.
- Lastly, you’re not working anymore so you’re not contributing to qualified accounts.
There are three “buckets” of money with different tax treatment:
- Taxable (cash, savings, and CDs)
- Tax-Deferred (401(k)s, IRAs, 403(b)s – any qualified money)
- Tax-Free (529 Plans, Roth IRA, Indexed Universal Life).
Our goal is to help you distribute your money in the most tax-efficient manner, so you avoid paying excessive taxes and fees.
Step 4: Invest
Explore the standard, passive investment approach vs. the personalized, tactical investment approach crafted to guide you through the necessary steps to enhance your wealth and bring stability back to your financial life.
We’ll work with you to grow your surplus assets in the market to enhance your overall wealth.
Step 5: Manage
As life changes, so does your plan. Annual performance reviews are dedicated to building a summary of the last year of your income plan.
We’ll also review overall performance any plans put in place and compare it to what we originally discussed. Most importantly, we will create a checklist with you and reassess your needs as they may change from year to year.
Receive a Customized Retirement Income Shortfall Analysis
Request your custom Retirement Income Shortfall Analysis and we will analyze your current retirement plan using The Retirement Income Framework and provide you with a rating from 1% to 100%, called Your Retirement Success Score.
We will also give you a yearly breakdown of your account withdrawals and notify you if you happen to experience an income shortfall. At the same time, we’ll let you know if we see any areas to improve your success store.