Roger and Elizabeth were both approaching their mid-60’s, and they were looking forward to retiring soon.
Roger was a marketing manager at a Twin Cities-based Fortune 500 company. He worked there his entire career and had generous retirement benefits: 401(k), stock purchase plan, even a pension.
His wife Elizabeth was an educator for a local school district. She also had a retirement savings plan at work as well as a pension and some other savings. Like a lot of families they had other assets in addition to what they had at work – IRAs, a mutual fund account, an old 401(k), and a comfortable home that was nearly paid for.
After listening to them explain their story, I asked Roger and Elizabeth how I could help.
Their #1 financial goal
They told me their #1 financial goal was to have consistent, reliable retirement income so they could maintain their current lifestyle without having to worry about the stock market, the economy, what would happen if they got sick, or who was in the Oval Office.
Roger and Elizabeth were confident they had enough money to retire, but they also wanted to be sure they were being smart with their money and making good choices.
Some of their accounts were taxable. Some were not. They needed to make important decisions regarding their pensions and social security benefits, and they didn’t fully understand all of their investments. Their financial needs were quickly changing and after a lifetime of saving for the future, it was time to do something different.
Their experience is typical of what many couples go through as they approach retirement.
Roger and Elizabeth had the resources to do what they whatever wanted to do, but they didn’t know how to make the best use of those resources, or the best way to meet their future income needs, or even where to begin the process of figuring all this out.
They needed a plan, but in Roger’s words they had “no idea where to begin”.
Fast forward to today.
Roger and Elizabeth tee off twice a week at their favorite golf course in Scottsdale where they spend a month or two every winter.
Their finances are consolidated and organized. And most importantly …
They have the comfort of knowing that they have a realistic strategy in place to meet their income needs for the rest of their lives, and that they still have enough liquidity and flexibility in their plan for them to provide financial help to their kids or grandkids, pay for future medical care or make other adjustments to their plan as their needs change.
What’s more, they are able to do this without risking any more than necessary in the stock market.
How did they do it?
Working together we were able to implement a retirement income plan that meets their short and long-term retirement income needs, while minimizing market risk and allowing flexibility for other opportunities or expenses that will come up.
I call this process my Bottom Line Retirement Income Plan™. It’s a process that anyone can use to put together a framework for creating income in retirement.
It accomplishes four things:
First, it determines how much income you need each month to meet your needs.
Next, it also calculates how much income you can count on from reliable, consistent sources like pensions and social security.
Then, we calculate how much additional income you need from other sources like your IRAs, retirement plans at work, stocks and mutual funds, etc.
For example: If you need $8,000 in monthly retirement income and you are getting $6,000 in pensions and social security, then we need to figure out how to come up with the additional $2,000 every month to meet your needs. Ideally this income would come from dividends, interest or other sources that allow you to avoid touching your principal.
Finally, we determine the best strategy to get maximum income from your investments while allowing them to grow over time with no more risk than necessary.
The benefit of a strategy like the Bottom Line Retirement Income Plan™ is that you will cross the bridge to retirement knowing that your retirement income needs will be met, while minimizing the stock market and other risks that so many people often take.
The names and certain details in this post have been modified for privacy reasons. This blog post is a hypothetical example for illustrative purposes only.