Retirement income planning – it’s not a walk in the park.
There are several serious challenges with retirement income planning, but there also have been several strategies to help relieve the uncertainties.
Here’s a list of challenges I review with clients frequently,yet gratefully, I’m able to provide perspective and strategies related to all of them:
- Running out of money too soon
- Failing to achieve expected returns
- Paying more than necessary in taxes
- Uncertainty when to start drawing income from investments
- Lack of clarity about fixed and variable expenses
- Uncertainty about medical expenses and long-term care
- Confusion about which accounts to draw from under various tax scenarios and circumstances
Okay. That’s enough. I don’t want to frustrate you, but I do want to nudge you to study hard or seek an advisor with robust answers, well-vetted strategies and strong communication tools. When you’re working with a financial advisor, who really has your best interests at heart, it’s wise to work with someone who understands these aspects of your retirement income plan, who will show you your unique financial projections and how the strategies he recommends work in your favor. Once you have a game plan, adjustments can be made over time and progress measured in relation to your personal financial goals.
It’s not enough to get your Retirement Score, grab a couple fixed annuities that your investment advisor recommends and think everything is going to be fine. There is a better, more comprehensive approach for those that want answers or others that just want to work with someone whom they can trust to do the right thing. Trust can begin with an advisor, who has released his allegiance to any particular large firm. At this point in my financial career, I do feel that some large, brand name firms demand too much of their advisors to serve the firm’s interests over client’s interests. Many times the easy approach is to offer a product solution, instead of performing the rigorous work and client education required to implement a more efficient plan. We like to work hard for our clients.
My value statement is the following “There is no greater good that I can do in this life than serving others. I’m grateful for the opportunity to help.”
More on this later. We’ll start next time with a lesson about William Bengen, author of the “4% Rule,” an investment draw-down rule that he proposed in 1994 for one of his clients. In fairness to Mr. Bengen, he’s changed his position since then, but the “4% Rule” still circulates around water cooler conversations. Here’s the spoiler. Mr. Bengen devised the rule assuming U.S. stock and bond market returns between 1926 and 1976. A lot has changed in the last 43 years, especially with interest rates.