Many wealth management firms promote the idea that saving enough money is the final step to financially sustaining their clients throughout retirement. But what many fail to address is the most important financial challenge of retirement: Distribution planning. This is the process of turning your assets into spendable cash-flow that will fund your living expenses and replace the paycheck you’ve been relying on for decades.
To account for the loss of your paycheck “safety net,” a plan must be put in place to ensure:
- You won’t outlive your assets in retirement by spending too much.
- You won’t spend too little and not fully enjoy the benefits of a lifetime of saving.
- You optimize how you turn investable assets into retirement cash flow.
During the accumulation phase of your financial plan, you learned that accepting more volatility in your portfolio and taking more risk with your assets resulted in higher returns over longer periods of time. Now that you’ve reached the retirement phase, time and volatility may no longer be your allies.This change in the equation between high returns and portfolio volatility in your retirement plan takes the form of what researchers call,“Sequence Risk.”
The order in which you experience annual returns is crucial. You need a plan to manage volatility and adjust your retirement spending in times when financial markets deliver disappointing returns. (See the chart) By using different methods of determining the value of financial markets, onpoint goes beyond simple diversification as a means of protecting your assets from serious market declines.
Pinnacle Wealth Managers will help you determine the optimum mix of withdrawals from multiple accounts to minimize your taxes by creatively modeling your current and future tax liabilities. They will evaluate the tax basis of the securities you own in taxable accounts and help develop a plan for liquidating those securities.
The goal is to protect your portfolio while optimizing the tax consequences of security sales needed to generate personal cash flow.
Retirement is the beginning of an amazing new chapter in your life. You’ve worked so hard to achieve financial peace of mind and ensure the safety and well-being of your family. Now it’s time to make certain that a lifetime of savings is working its hardest for you during retirement.
Pinnacle’s onpoint planning process is built on the expertise and experience of our wealth managers. Each advisor is an experienced financial professional who begins the planning process by getting to know you and your family. What are your unique wants and needs? What specific concerns or financial challenges does your family face?
By collaborating with you over the length of your retirement, we will become a powerful financial partner for you and your family.