Some firms focus on the accumulation of assets for retirement; we focus on how to generate a new income stream in retirement, also known as wealth distribution strategies. We will help you understand one of the most overlooked expenses that people have in retirement: income taxes.
Now that you are retired, we need to determine how we can generate an income stream for you that you will not outlive. Accumulation of assets for retirement is much easier than the distribution side of retirement. During accumulation, if you do a good job of saving, markets go up more than they go down. Once you reach the distribution side of retirement, you are faced with many difficult decisions: Should I be looking at strategies such as Roth conversions now that I may be in a lower tax bracket? How do I handle required minimum distributions (RMDs) at age 70 ½? When do I take Social Security? What is the appropriate amount of risk I should be taking in my portfolio?
We have a process to help you make these decisions by looking at your unique financial situation.
Social Security: When do I take Social Security? We look at the payment options available to you and decide which option is in your best interest. This will give you a set amount of income each month.
Income for Life: Which pension options should you utilize? Or, if you do not have a pension, which investments should I look at for my steady stream of income?
Income Producing Assets: We look at assets that have a focus on income-producing, such as dividends, instead of a focus on only growth. These assets may not be as liquid but will generate income.
Three Buckets: We divide the remaining section of your portfolio into three buckets.
- Short-Term/Conservative Bucket: Keep up with inflation, but be steady & stable; for additional income needs. Put enough money into last year’s 1-5. When it runs out, go to the next bucket.
- Moderate Bucket: little more risk, but next 5 years (years 5-10)
- Long-Term Bucket: self-sustaining retirement income plan. Beyond 10 years
Smart Money: We always want to make sure that we have plenty of “Smart money” within our portfolio. This means:
- Not selling out of good investments when markets are down because we need income.
- We focus on diversification by income tax treatment and minimizing the income tax liability so you don’t have to pay as much in income taxes. Other firms may diversify solo by asset class.
- We don’t want to pay penalties to get out of an investment early.
