The typical retirement plan devised by a financial advisor will call for you to manage your investments in stocks, bonds and cash so that they last through your projected life span.
I agree that you need to create a plan to manage your investment assets, but I also remind people entering the retirement zone to consider their other assets and resources: Your house, income annuities – and your ability to continue to work.
Continuing the theme of Financial Literacy Month, I will define terms that will help you create a plan for retirement income, particularly as it relates to taxes and risk management.
The key to a successful retirement income plan is to increase your spendable income (money after taxes paid). So you might want to know a lot more about taxes.
You also want to make it dependable income (money you can count on). You want your income to be predictable and stable, like Social Security or a company pension. It all means that you are going to want to understand risk management. More
Like most Boomers who are either already retired or planning for the day your paycheck stops, you have probably saved some amount of money to be available for the years you are not earning a salary. And you may be quite knowledgeable about retirement savings accounts like the 401(k) or IRA, or investment products like mutual funds, stocks and bonds.
The next stage of your financial life – converting your savings into the maximum amount of dependable, spendable income – is often more complex and confusing. It also comes with a whole new set of terms.
The one thing nearly every professional financial advisor will agree upon, no matter what their specific approach, is that it’s very difficult to time the stock market. Money managers who are celebrated as stars one year — because they spotted something the rest of us didn’t see – may be bums the next.
The same truth applies to the more mundane world of interest rates. Though interest rates don’t tend to soar and crash with the drama of the stock market, the only sure way to detect trends is with a rearview mirror.
So when a 65-year-old woman visited Go2Income to calculate how much money her savings could provide, she remained hesitant. She knew how much income a QLAC she was considering would pay at age 85, but she wondered if she could get more income by delaying her investment in the hopes that interest rates would rise and insurance companies would offer better QLAC rates. More
Many experts tell you to base decisions on your “gut” reaction, and often that is a good and accurate way to make up your mind, such as when you meet a politician face-to-face for the first time or your daughter brings home a new boyfriend.
But when you are making decisions about your financial future, it’s usually better to rely on reason and fact, such as numbers that you can calculate. After you have looked at the analysis and the potential results, you can make a decision that fits your life and personal preferences. More
