How do I plan for retirement?
Retirement is one of the most important life events many of us will ever experience. From both a personal and financial perspective, realizing a comfortable retirement is an extensive process that takes sensible planning and years of persistence. Once it is reached, managing your retirement is an ongoing responsibility that lasts throughout your life.
While all of us would like to retire comfortably, the complexity and time required to build a successful retirement plan can make the whole process seem daunting. However, it can often be done with fewer headaches (and financial pain) than you might think. What it takes is some homework, an attainable savings and investment plan, and a long-term commitment.
At Riverplace Capital, we help clients plan for their retirement. We consider all special circumstances and have experience managing and preparing for the tax implications of retirement. Once we make a retirement plan together, we then revisit the plan periodically to measure progress. We can help you plan, implement, execute – and ultimately enjoy – a comfortable retirement.
Managing assets through your retirement.
Just as important as developing a retirement plan is to create a strategy to manage retirement assets, not only through the accumulation phase, but also through retirement itself.
Sometimes the instinct during retirement is to play it ultra-safe, perhaps rolling funds into CD’s and other “safe” fixed income assets. No one has to tell you what the current returns are on these. These returns may not be enough to sustain the asset base for as long as needed.
As one depends on their asset base for their livelihood, safety and stability become more important. So the challenge becomes how to provide that safety and still earn sufficient returns to maintain a sufficient income for as long as 25 years or more. Part of the answer is in the investment allocation and part is in the overlay of protection as part of the investing strategy. Learn more about this below.
Dynamic Asset Allocation
Riverplace Capital implements the principals of dynamic asset allocation with investments. This means that to stay ahead of typical market cycles, we reduce allocations to riskier asset classes during periods of prosperity and calm and increase riskier assets during periods of crisis and opportunity.
At Riverplace Capital asset allocation decisions are based upon the client’s needs and level of resources. Here every attempt is made to properly tailor an approach that can meet needs with the least amount of risk. Results are regularly reviewed to assure that goals can continue to be met. Obviously, one shouldn’t project returns from cycle lows or highs, but attempt to normalize both to a more realistic expectation. This is the approach that Riverplace Capital uses to help you prepare for retirement. We plan, appropriately allocate, manage, track results and adjust as needed to meet your financial needs.
How Much Money do I need to retire?
An important question for investors saving for their retirement is how much is needed to provide a reliable stream of income? You need a current financial cushion for unforeseen needs and a pool of assets that can provide an income once you stop working.
Life spans continue to extend with more people expected to live to 100. Expectations for the average person are to live well into their 80’s. More people expect to be more active for much longer. This means that demands for retirement income have and are continuing to increase. As a result, it takes more and more money up front to fund these demands.
Each situation is unique and depends on a variety of individual circumstances and preferences. However, some rules of thumb can be used to guide you. To keep sustaining the pool of retirement assets, one should not withdraw more than 3-5% annually. During sustained down periods, that amount should be even less.
Using these parameters, a retiree needs 20 to 30 times the annual income desired from the pool of assets. For example, say a couple needs or wants about $100,000 annually for their ongoing needs. If they receive $30,000 from Social Security, that leaves $70,000 they need to provide from their own sources. Using the multiple factor suggests that they will need approximately $1,400,000 to $2,100,000. This is an approximation and can change for any number of circumstances.
If keeping the asset base in place is not an objective, then the need will not be as large. However, in that case there is the risk of outliving your asset base. We understand that it is also possible that you may be behind in your retirement planning. We can help you develop a plan to get back on track.