Every Monday, I like to review a number of investment and retirement-related articles from the previous week. I do this for several reasons.
First, it’s important to be in-the-know. When helping people prepare for retirement, we lean on our knowledge, experience, and understanding of our clients’ unique needs.
Secondly, data-gathering practice helps build the framework for current trends average retirees are facing. Week after week, retirement-related articles cite data from institutions, think-tanks, and research groups. Many of these articles share the common theme of “top retirement concerns.”
This most likely was one of your top concerns early on in our relationship (it may have even made its way onto the whiteboard).
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Since I joined my dad at Oakmont about 10 years ago, the top cited concern has consistently been the fear of running out of money. Or, put another way, the fear of outliving money.
While this concern is certainly valid, this retirement “worry” seems to be losing its spot on the leaderboard.
A Shift in Top Retirement Concerns
This shift is highlighted in a recent report from Cerulli Associates, a leading source for comprehensive data and analysis of the global financial services industry, on the evolution of the retirement investor.
Lately, I’ve been seeing more articles mentioning cash-flow and distribution strategies as top concerns. Simply put, this is when, how, and from which accounts you should withdraw your money.
When 1,000 current 401(k) participants were asked what they consider most important when planning for retirement, over half said that cash-flow issues are top priorities. This includes Social Security timing, how to develop monthly income from investments, and ways to structure guaranteed income.
How Oakmont Can Help
One of the reasons we’ve developed the Oakmont Retirement Blueprint™ is to address these issues head on through the Income Planning section.
The purpose of your income plan is not only to determine how to withdraw from your accounts, but to review tax implications, the timing of Social Security, and the effects these factors could have on your investments. Every income plan is designed to fit your unique situation. For some, creating guaranteed supplement income is key. For others, a balance between growth and systematic withdrawals (a set % to cover expense need/gap) is preferred. And for others, it comes down to using different “buckets” or investment strategies to account for risk and time horizon.
Thinking about all the variables when trying to figure out a withdrawal strategy can certainly seem daunting. To quote a recent client: “…this is crazy. Just Craaaazy!”
He concluded our session by noting there was no way he could’ve figured this out himself.
The Big Question
My big question to you is this: have you reviewed your cash-flow strategy lately? If not, would you like to?
I encourage you to schedule a 15-minute chat with an advisor today.
We can’t control what the market will give or take from us, whether a trade deal will happen soon, or if the UK will ever leave the EU (993 days later, there is still no progress).
Luckily, cash-flow planning is one of the financial variables that you do have a bit of control over.
-Written by David Hicks, Vice President and Investment Advisor at Oakmont Advisory Group.