Next stop retirement

“Welcome onboard, this is your Captain, speaking. Prior to take off, just a brief announcement. It’s my duty to inform you that our chances for safely reaching our destination, on this final leg of the journey, are approximately 84.3%. We will be traveling over thousands of miles of open water, there will be heavy turbulence and at times it will be uncomfortable, so buckle up tight and enjoy the flight.”

Would you be reaching for your bag from the overhead if this was the announcement on your dream trip to Hawaii? If so, then why would you settle for similar, or worse odds, for whether or not you will make it safely and comfortably through to your retirement destination?
One of the biggest pitfalls of retirement is not having a written, verifiable, executable plan for distribution of your retirement savings.

So, what’s YOUR plan for Income – Retirement Income? It’s a simple question that stumps a lot of people, when they really pause to think about precisely which accounts retirement income will actually come from, and how.

Consider that, at some point we will either need to or be required to withdrawal money from our IRA and Retirement accounts.
How do you ensure you will not have to take a distribution when market or other conditions are adverse? One of the very first financial rules we learn is “buy low and sell high.”

However, another retirement rule eventually REQUIRES us to take a DITRIBUTION, a REQUIRED MINIMUM DISTRIBUTION, whether it’s a good time to do that or not. So, do you have a verifiable income strategy in place that allows you to keep both of those rules?
Financial institutions attempt to predict future retirement income using use complicated formulas, called “Monte Carlo” simulations. These hypothetical income withdrawal scenarios are based on investment portfolios, using past market performance, to try and guess the odds of you outliving your money.

Hint, the name (Monte Carlo) should be a tip off …

Why should we build a retirement income plan around chance? Just like our dream flight, we would all prefer a scenario where failure was not an option. Is guestimating, say for example, a hypothetical 78% or 84% projected chance you won’t outlive your income, a sound strategy?

Why is so much of the income planning advice we get at age 65, similar to the investment advice we got when we were age 35? Is just adding more bonds to our volatile retirement investment portfolio the closer we get to retirement a sustainable prudent plan for retirement income?
Investment companies say invest for the long term. But, how long is long term? And how much of our savings needs to be in volatile investments as we attempt to draw reliable income? Does it even make sense to expect our investment and IRA accounts with values than can swing up & down be the source of the stable retirement income we will rely on?

The fact is, Financial Institutions aren’t very good at giving you the “Keys Back” to your money. The 4 simple Rules of Financial Institutions offer insight as to why this style of planning is prevalent.

Financial Institutions, RULE #1. They want our money. That’s a pretty clear one. They want us to deposit and invest, put our hard-earned dollars into their products, fair enough. RULE# 2, They want our money flowing in systematically. Primarily through methods such as dollar cost averaging, pay roll deduction and automatic 401k deposits. RULE #3, Financial Institutions want to hold onto our money as long as possible, consider penalties for early withdrawals. RULE # 4, When it’s time for us to finally reap the reward they want to give us back as little as possible. Consider such as rules as Required Minimum Distributions.

Because the longer the institution is in control, the longer they have use of our dollars and the more fees they collect. When was the last time you heard of planning for the MAXIMUM DISTRIBUTION?

We need Financial Institutions and financial products. However, we need strategies in place to use those products to our full advantage, not the way

Financial Institutions want us to utilize them. So how do we do that?

The Financial Institutions plan is to hold on to our money and dribble out our wealth by the way of methods like interest only withdrawals and Required Minimum Distributions.

When do you ever get the keys back to your money? Who benefits most from the Rules of Financial Institutions and should we be using a different rule book or “owner’s manual”?

Is there an alternative way to do it? Can we have a simple executable strategy for Income, Safety and continued Growth. Is it possible to reduce risk, volatility, fees and expenses and have predictable and sustainable income?

So, what’s YOUR plan for Retirement Income? Decisions like what to do with our 401k, IRA, Social Security and pension can be overwhelming, and mistakes costly. Should you take social security early and possibly enjoy a higher benefit later? Which retirement assets do you tap for income first, in what order and how much income can you take without the fear of running out of money? How do you avoid taking a REQUIRED distribution when the market is down for a year, or two or even three years?

Just like our dream trip to Hawaii, our final retirement destination must have a verifiable process, safety and multiple redundancies built into the pre-flight check list, with the goal of increasing the probability of success.

A good place to start to understanding your options and plan for your unique circumstances, is to meet with a financial professional that has a Macro-

Economic viewpoint and experience and understands these Rules of Financial Institutions. Do your homework and as specific questions related your unique circumstances and desires and most importantly as for specific measurable and verifiable answers.

Start by asking the question, “What’s your plan for sustainable, predictable, reliable income that keeps pace with inflation and that you can’t outlive?”

Brian Andrus, CFP is a managing partner of Wellspring Financial, LLC.
96 B Broad Street
Guilford CT 06437
[email protected]*

Visit the link for an educational video on social security benefit timing and the opportunity to receive a personalized social security income analysis: