Creating A Holistic Retirement Plan: 8 Core Ideas to Retirement Income Planning

by | Feb 10, 2017 | Personal Finance 101

8 Core Ideas to Retirement Income Planning

Planning for your future can seem difficult. The options are endless, from 401(k)s and Keogh Plans to SEP and Roth IRAs. We, at TetonPines Financial, use a multi-tiered approach to providing our clients with an effective retirement plan. The following eight (8) concepts represent the core values that we utilize when helping our clients plan for their post-retirement futures:

1. Be in it for the long haul. The quality of your post-retirement life should have a prominent role in your investment plans. Americans are living longer. According to World Bank statistics, the average life expectancy of a male in the United States has increased from 66.6(1960) to 76.6 (2014), and the average life expectancy of a female in the United States has increased from to. However, the age of retirement has only increased from 73.1 (1960) to 81.4 (2014) . And with the increase in health care costs that occur due to that increase in age, oftentimes, seniors are left with little more than Social Security to provide for their daily welfare during their golden years.

2. Efficiency matters. The strategies that you take today may not be as efficient tomorrow. Your retirement plan should be flexible enough to allow you to make those changes.

3. Set reasonable goals. Retirement planning should consist of reasonable goals and expectations. Market fluctuations and volatility play a vital role in the strength and viability of your retirement investment portfolio. Having the insight will enable you to make the necessary changes when the time is right.

4. Take a risk assessment. The higher the risk an investment has, the higher its rate of return. However, increased risk also brings with it a higher risk of failure.  Your retirement planning should provide a valuable risk assessment based on your preferred risk tolerance. Finding the proper balance between risk and security is paramount in a successful retirement plan.

5. Build an integrated strategy to manage your retirement risks. A successful retirement plan should contain a strategy to evaluate different retirement options based on a correlation between the amount of risk and its rate of return, assesses the retirement income tools available, and provides the maximum ROI possible while minimizing the overall level of risk.

6. Look at the complete picture. A successful retirement plan should include multiple avenues of retirement income, from a portfolio that invests in stocks, bonds, mutual funds, and ETFs to insurance options, such as annuities. Diversification is a necessity.

7. Create a Household Balance Sheet. A household balance sheet is a complete view of one’s financial health. It lists the current and future assets (home, income, financial assets, insurance, etc.) and their current and future liabilities (fixed expenses, contingencies, estate planning, discretionary expenses). A household balance sheet serves as the foundation upon which a viable, long-term retirement plan is effectively built. Once a household balance sheet is constructed, a retirement plan can then be built that adequately provides for your retirement goals and needs.

8. Find Your True Liquidity. True liquidity is a number of assets that remain after your future liabilities have been accounted for. Not all assets are alike. Some assets are freely available while others have been earmarked for future spending needs.

Retirement income planning is a topic of grave importance that should not be taken lightly and finding a partner to help you assess your retirement needs and provide you with an unbiased long-term retirement income strategy is of the utmost importance. Your partners here at TetonPines Financial are always available to giving you a helping hand, provide you with understanding and insight into your current and future retirement needs, and help you establish a plan to reach all of your goals.