6 Things to Consider When Creating Retirement Plans
October 15, 2012 2:52 PM
6 Things to Consider When Creating Retirement Plans
As 75 million Baby Boomers stand at the edge of retirement, most will have to look beyond government programs to sustain their standard of living.
Here are six things advisors and their clients should be aware of when setting aside income-generating retirement plans.
Information Courtsey of the Certified Financial Planner Board of Standards
Here are six things advisors and their clients should be aware of when setting aside income-generating retirement plans.
Information Courtsey of the Certified Financial Planner Board of Standards
1. Time Your Retirement Carefully
A retiree withdrawing money from his or her retirement account during a bad investment market might leave them vulnerable in the latter stages of their lifetime. To best ensure sufficient funds for a lifetime, delaying retirement and continuing earning income during down markets is worth thinking about.
2. Fixed-income Investments are Only Part of the Picture
While it is good to rely of fixed-income investments for a steady stream of income, it may not always be enough to sustain a retiree's standard of living. Inflation, today's low interest rate economy, and the rare occasion of defaults may bite into the purchasing power of regular payments. It is important to have some allocation of growth stocks/ higher yield investments in your basket.
3. Withdraw Based on your Needs
Withdrawing money from your investments based around your needs will often put you in a better position for the long term. Discuss with a CFP professional to match your withdrawal rate to your unique circumstance of life.
4. Dont Fear Spending Retirement Portfolio Funds
Retirement portfolios are meant to be spent during ones lifetime, and doing so under the guidance of a CFP professional can enable a more comfortable and secure retirement.
5. Understand Your Tax Obligations
Making use of taxable and tax-deferred accounts can help control amount of tax owed per year, and ultimately aid in sustaining a retirement portfolio.
6. Spending Matters More Than Investments
Contrary to popular belief that getting the investments right in a portfolio will lead to a stable retirement, withdrawals from an account actually matter more. Focusing on expense management is an effective way to ensure sustainability of resources.
