Retirement is an inevitable eventuality. To ensure you have a hassle-free one, it is imperative to plan your retirement income wisely. Expected withdrawals, portfolio allocation, and risk tolerance are some of the aspects of income planning that are very complex to navigate.
For you to handle your income planning in retirement correctly, getting a fiduciary financial planner, such as Shoreline Financial Advisors, to assist you is prudent. They will assess your finances and situation, and then suggest different approaches on how to handle your retirement income. Here are some of these approaches.
1. Total Return Approach
The total returns approach is a holistic way to manage all your retirement investments, such as dividends, bonds, and capital gains. This approach suggests allocating all the assets to one account from which a predetermined amount is withdrawn each month recreating a constant payment.
A total returns approach is adaptable to many lifestyles and provides a predictable income stream. It, however, requires extensive management compared with other approaches.
2. Time Segmentation Approach
This approach divides your investments into different time periods of your retirement. Here, you put your money for the first years of retirement in low-risk investments, while high-risk investments make up the returns after about 15 years into retirement.
You can match your investments to the activities you plan in retirement, although there are no guarantees on returns.
3. Essential vs. Discretionary Approach
In this approach, you divide your retirement expenses into the essentials, such as food and clothing as well as discretionary ones, such as entertainment and travel.
This approach suggests using low-risk or guaranteed product returns for essentials, while high-risk investment returns cover discretionary expenses. Though returns are not always sure, you won’t have to worry about your essential expenses.
Depending on your situation, one approach might suit your retirement plan. In other instances, however, your financial planner might suggest combining different approaches. The ideal retirement income approach as advised by the experts assures you of bliss and comfort in retirement.