Barry and Adam wrote and published the book “Guided Retirement Income Planning” in November 2020 to create higher levels of financial literacy and to show a comprehensive and logical process for executing income planning in retirement. Since we believe that this subject matter is so important and relevant, we are going to roll out one chapter each month. While our approach and philosophy will remain consistent in every economic cycle, customization for each household will vary.
We want to emphasize that some of you are not close to retirement and it is never too early to plan. You may also have loved ones, friends, or colleagues that are in need of help. We would be pleased to send them a complimentary copy of our book. We simply hope to help as many people as possible. As we present these chapters, we invite you to circle back to us with any questions or concerns about the content and how it relates to you.
Please enjoy Chapter 12 below! If you missed any of the previous chapters, you can read them all on our blog here.
Regards,
Your Partners at MGFS
Chapter 12
Completing the Plan
(Steps 6, 7, 8, and 9)
“Often when you think you’re at the end of something,
you’re at the beginning of something else.” (Fred Rogers)
Chapters 6-11 review the first 5 steps of retirement income planning, respectively. This chapter briefly highlights the remaining steps (see Chart 5.1 for reference). They reflect the critical planning at this juncture in the process and, ultimately, your hard work to prepare for retirement.
Step 6 – Weigh alternative asset allocations and strategies – Once the three core distribution strategies are analyzed, it is important to then evaluate which approach or combination of approaches make sense for your final retirement income plan. Often it takes time to find the right balance between the flooring, bucketing, and systematic withdrawal strategies. At this point, you will establish a proper tax strategy and the order in which you will use your different sources of income. Chapter 16 will elaborate on these topics. Bringing the process together, retirement income software may then be used again to model and stress-test the plan.
Step 7 – Decide on a plan – After weighing the core distribution strategies, tax planning, and order of distribution, it will be easier to decide on a final plan. In this step, it is crucial to strike the right balance between income stability and growth, best matching your style, needs, and preferences.
Step 8 – Execute the plan – Once the plan is created, financial assets are reallocated to execute the plan. Mistakes at this stage can be costly and dangerous from a tax liability standpoint. Please consult with your financial and tax advisor, as appropriate, when processing, transferring, and opening new accounts.
Step 9 – Periodically review and modify the plan – Finally, set a timeframe to review your plan. Some people may need to review it once or twice a year while others may need to have theirs reviewed more frequently. Typically, we recommend that plans that are partially or marginally funded be reviewed more frequently than those that are properly or well-funded. However, these are just suggestions and, as always, the frequency depends on your needs and preferences.
The Lighter Side of Longevity from Woody Allen
- I don’t want to achieve immortality through my work….I want to achieve it by not dying.
- You can live to a hundred if you give up all the things that make you want to live to a hundred.
- I do not believe in an afterlife although I am bringing a change in underwear.