Perhaps today more than ever before, America’s retirees face an important question, “Do I have enough money to provide income for the rest of my life?” Knowing if you have enough money to retire, and then planning to make that pool of money last as long as you need, is the focus of our NextPhase™ Retirement Income Solution.
What the NextPhase™ Retirement Income for Life program does is create a plan that with a high degree of certainty will provide income for the rest of your life, or your spouses or partner’s life that they will not outlive. This takes one of the major concerns of retired people off the table which is fear of outliving their money.
In this plan we calculate an assumed inflation rate. This estimate is never going to be exact but will be in the ballpark for a start and can be adjusted as time goes on. We can figure out an estimated tax rate and make an assumption about life expectancy. At Valued Wealth Management we recommend going with an estimated life expectancy of at least 95. Some people go longer for 100 or 105.
We make sure we use estimates that are attainable and safe. In keeping with the goal of safety, the money that you will need in the near future will be invested more conservatively than the money you will need ten or twenty years out. The money you will need for at least the next five years will not be exposed to the stock market at all. And as time goes on, we will continue to shift money to non-market-based investments as we get closer to using that money.
When planning with “NextPhase” we break the money up into segments. The segments are designed in a timeline around major events of your retirement cycle. It could be when you intend to retire if that’s in the future. When you are going to begin to collect social security or when any type of payment is going to begin or expire.
We segment the money and time to reflect these major life milestones from day one when that change occurs.
Money needed for the next five years can look very different from an investment perspective than the money that will be needed fifteen years out. The money fifteen years out obviously is going to be invested for a fifteen-year period. So, it certainly is going to be invested more aggressively because if the market corrects today, you have fifteen years for your investment to recover.
Historically, the stock market experiences a correction of 10% almost every year! A bear market, which is a correction of 20% or more has occurred about every 4-6 years.
Following these corrections/bear markets, the stock market has always recovered and gone even higher than the previous high point. So, we want to make sure that if there should be a market crash there is enough time for your investments to recover and grow.*
This time-segmented, inflation-adjusted strategy can help give you confidence that you will not outlive your retirement income.
Find out more about our NextPhase™ Retirement Income Solution.
*Past performance does not guarantee future results.
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