The key to a long and prosperous retirement…..
- Knowing exactly how much money you need to retire AND how to stay comfortably retired
- Understanding how to retire because you only get one shot at cracking open your nest egg.
You are thinking about retirement planning and find yourself wondering if you will have enough money to retire and do all the things you want to do while retired. You are looking for some guidance on what to do and where to go from here.
- I would encourage you to start by taking The Key Question quiz, to find out how much money you need to retire comfortably and stay comfortably retired.
- I also invite you to look into The Life Enjoyment Experience™. This process has helped thousands of clients retire and achieve dignity and independence.
- Read The Sunny Side Up – A Guide to Cracking Open Your Retire
The Growth and Income Bucket strategy overcomes
Many different challenges faced as a retiree when it comes to managing your nest egg.
- Allows you to keep pace with inflation.
- Protects your gains as you go.
- Staggers your time horizons.
- Overcomes sequence of return risk.
- Takes advantage of dollar cost averaging.
- Helps ensure you will not run out of money.
- Helps maximize your potential.
- Allows you to control your emotions.
This strategy should be the cornerstone of your retirement plan when determining how to structure your nest egg in retirement.
To learn more about the bucket strategy, click here.
When heading into retirement you need to keep several things in mind that play a huge factor in retiring comfortably and staying comfortably retired.
You need to consider:
- Your Emotions
- Your Fear
- The Twin Destroyers of Wealth (inflation & taxes)
Strong emotions are tied to health, family, money, and faith because a lot of emotional value is invested in each one. This causes money to be a major determining factor in many decisions made throughout your life. The pain of losing money is twice as great as the joy of gaining the same, so it is equally as important to manage your emotions, as it is to manage your money. Don’t make irrational decisions which are often made at the wrong time. When it comes to investments, what your emotions tell you to do is often the opposite of what you should do.
Fear lives in all of us and often drives our decisions. These are the three fears we have discovered while working with retirement planning clients:
- They will run out of money
- They are not maximizing there earning potential
- They are not being able to enjoying retirement because they worry about their finances
The Tranel Financial Group retirement planning process, known as The Life Enjoyment Experience™, is designed to answer these three fears.
The Twin Destroyers of Wealth
Taxes and Inflation is your retirement’s worst enemy and if left unattended, will cause you to outlive your money. Over a 20 year period, a 3% inflation rate will cause the cost of living to increase by 80%. Taxes will always go up and play a significant role in your retirement income. By combining inflation and taxes, the destroyer of wealth is created. Good news is these factors are manageable with good retirement planning in place.
Next there are three scenarios that can significantly alter your retirement:
Sequence of returns
Dollar Cost averaging
Your time horizon is one of the most commonly over looked scenarios because anyone can predict how long of a time horizon they have when planning for college, or the date they retire. Retirement however is until the day you die and no one knows that date. It is very important your retirement plan is designed to outlive you, so you do not outlive it.
Sequence of Returns
Sequence of returns plays the largest role in retirement because you have no control over where the market and your investments will be, when you retire. When you are working and contributing to your 401k, it does not matter when the market is up or down because you are continuing to add money to your account. See the illustration below.
When you retire you will need to withdrawal money from your account regardless if the market is up or down. If you retire into a down market and you are withdrawing money, you are compounding your loss. Our retirement planning process is designed to protect you from this very scenario.
Dollar Cost Averaging
This last section addresses Dollar Cost Averaging. Anyone who has a 401k or is contributing to an IRA, are doing this. It is a powerful way to grow your money over a reasonable period of time. When you are in the “preretirement” accumulation phase, you would think option A (below) is the better option but in fact option B is the best option. As stock prices fall, you are able to buy more shares. Then when the stock price goes up, you own more stock. With the higher price, you are able to buy less.
Pulling it all together – The Strategy
We have helped thousands of people retire using our core strategy, know as The Bucket System. This system takes all of the above factors and scenarios into consideration to come up with a sound retirement plan. You are able to retire with dignity and independence knowing your money is going to out live you. To learn more about this system and how it works, sign up for your complimentary meeting today.
Dollar Cost Averaging involves continuous investment in securities regardless of fluctuating price levels of such securities. The investor should consider his/her financial ability to continue to purchase through periods of low price levels.