Retirement Income Planning

Saving for retirement is what we must do concurrently, while pursuing all other goals in life. I like to describe Retirement Income Planning as the process of creating a paycheck for ourselves to be available when we cease working. I believe it is important to identify enjoyable goals to pursue in our retirement. Goal-based financial planning helps visualize how your future will look so you can work towards it. This is also helpful in anticipating how much we will need to save today to secure the retirement we want tomorrow.

Retirement income planning encompasses planning for some decisions that are currently “unknown” or “to be determined”. As a Certified Retirement Income Planner, I help clients prepare financially for the decisions that they will eventually need to make. Some of the questions related to these decisions are clear and expected, others are less obvious:

  1. What to do in retirement? Should part-time work be considered?
  2. When is the best time to retire?
  3. Where will you live? Will you make one or many moves? Examples are: a move to a more hospitable climate early in retirement, a move closer to children and other family, or a move later in retirement to address care needs.
  4. How much income is needed to cover a desired lifestyle?
  5. When to claim Social Security benefits, to maximize benefits over your lifetime and that of your spouse?
  6. How and when to take pension distributions? Should a pension benefit be taken in one payment or over many years? Deferring retirement benefits usually result in larger benefits!
  7. How to turn investments and other assets into income?
  8. How and when to sell the stock options granted by my employer so long ago?
  9. How to access the wealth accumulated in a home?
  10. When should I sell my business? Should I leave it to my family?
  11. What is the best way to cover health care expenses?
  12. When to plan for help?
  13. How long will a person live and how long should the resources last?

The seven obligations of a Financial Planner are the starting point to retirement income planning. They are:

• Understand the Client’s personal and financial circumstances; • Identify and select Goals; • Analyze the current course of action and potential recommendations; • Develop financial planning recommendations; • Present financial planning recommendations; • Implement recommendations; and • Monitor progress on an ongoing basis.

In addition, retirement income planning focuses on the spending of assets accumulated over a lifetime, and doing so in a tax efficient manner, while using strategies to ensure funds are available to the end of a person’s plan. Income security is a key piece of a retirement plan.

Preparation for spending in retirement includes methods to prolong portfolio life, increase wealth, and strategies to distribute and spend the portfolio in a sustainable manner.