Retirement Planning, Procrastination, and Safe Withdrawal Rates

{3 minutes to read}

As we’ve been discussing over the last few weeks, retirement planning has been a focus of mine. I want to continue down that path and talk conceptually about something we call the journey.

When someone is climbing a mountain, the objective is usually to get to the top. But once you have attained the summit, you now have to safely get back down. The analogy of mountain climbing is very similar to financial and retirement planning because the objective isn’t just to get to the top and accumulate the most money, but to safely arrive back down with a guaranteed retirement income. Too many times, people are just relying on tools that specialize in accumulation of money, not the distribution of that money.

Here is a link to a piece called Optimizing Retirement Income by Combining Actuarial Science and Investments. Also, there’s an article from Forbes Magazine called The Rich Person’s Roth. These two are very, very useful pieces talking about how you can build these two economic powers into your retirement plan.

Too many times, we see that the only thing people have done for retirement is save money in securities, so we have also attached some very valuable information called Safe Withdrawal Rates. Studies today show that the most that should be taken out of an investment portfolio for retirement income is between 2.8% and 4%. The higher the distribution rate that you choose, 4%-7%, the higher the likelihood that you’ll run out of money.

One of the biggest risks people face is what we call longevity risk. People are living longer and longer, so that nest egg needs to be sustainable to generate income for potentially 30-50 years.

How do you win the game? Well, it’s a combination of not only investments, but also actuarial science, where insurance and annuities act as additional economic benefits to allow you to spend your money differently. That’s what our planning is all about — allowing you to move from that 2.8% to 4% distribution rate to a higher distribution rate, utilizing insurance and annuities.

Take a look at these attachments and let us know if you’d like us to help you to get off the default path of a Monte Carlo distribution of 2.8%-4% and move to a 7%-10% distribution rate. Doing that will allow you to have the income you need for the rest of your life on a guaranteed basis.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS. Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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