Retirement Income Planning

 

Personal Lifestyle Plan

Designing a personal lifestyle plan is important because it is the determining factor of your satisfaction with your retirement lifestyle.  If you are close to retirement, take time now to think about how you would like to spend your time during retirement.  Would you like to take up that hobby you were always interested in but never had the time?  Drive an RV around the country?  Go back to school?  Perform volunteer work?  Start your own business?  Research your family tree?  Perhaps something else?  Answers to these and many other questions are important when planning your retirement because your choices will drive the financial demands of your retirement income plan.

 

Personal Investment Plan

Designing a personal investment plan is important because it identifies your sources and uses of income and establishes your retirement budget, based upon your personal lifestyle plan.  Your retirement will be more enjoyable if your income is structured to fit your lifestyle choices and if you have developed a retirement plan to preserve the assets you have worked hard to acquire.

 

Strategies

At Ridgecrest Capital, our retirement income plan focuses on strategies to help you:

  • Help avoid running out of money in retirement
  • Understand how market volatility may impact your retirement income stream
  • Create a retirement savings hierarchy
  • Track your asset consolidation and allocation

 

Steps to Develop a Retirement Income Plan*

  • Portfolio Review
  • Pension Review
  • Pre & Post Retirement Income Needs Assessment
  • Investment Policy Statement
  • Investment Selection
  • Portfolio Monitoring & Rebalancing

 

Retirement Income Plan

 

 A traditional retirement income plan uses forecasting of future market returns, interest rates, and inflation. These forecasts are then used to determine an acceptable withdrawl rate for a given peroid of time (your retirement). This type of theory is based upon probability of events, not historical outcomes.   This is what we call a "Probabilistic" model.

A "Deterministic" model, however, uses historical returns.  This kind of retirement income plan will determine your portfolio values and cash flow streams as though you were to start retirement in any of the one hundred years during the last century using actual market data and inflation. 

Market returns are deemed to be random in the short term, cyclical in the medium term and trending in the long term.  Therefore, asset allocation is an important factor to consider when designing your retirement income plan.  Your asset allocation can be determined in many ways, but at Ridgecrest Capital, we focus on two strategies.  First, the typical Risk/Reward strategy utilizing the Efficient Frontier.  Second, by utilizing historical market data, your retirement cash flow needs, and investment products that provide specific income for specific periods of time.

 

We hope this section has been informative and helps you to understand a few of the complexities involved in developing a retirement income plan for our clients.

 

Investors should be aware that investing based upon strategies or models does not assure a profit or guarantee against loss. These models are based upon past performance, which are not guaranteed to be duplicated in the future.

 *Securities offered through Royal Alliance