WHEN you need your money determines HOW you invest your money. The HOW is your portfolio’s asset allocation of cash, stocks, bonds, and real estate.
The variables in your retirement income are numerous and complex: multiple sources of income, required minimum distributions, taxes, inflation, and the variability of expenses (among other factors). “Rules of thumb” and a “back of the napkin” approach to forecasting retirement income might set you on the wrong course.
- WHAT do you need your money for in retirement? What are your hopes and dreams, your goals—your Bucket List?
- WHY is each goal on your list? Will each goal enhance the quality, enjoyment, and fulfillment of your retirement?
- HOW MUCH will each goal cost?
Projections about retirement income are best undertaken by a Cash Flow Study. Ask your investment advisor or financial planner for these calculations. Several topics in A Guide to Navigating Retirement discuss the information to gather to conduct this study properly.
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- Will you have enough money to fund the Bucket List?
- Will taxes and inflation reduce the amount of your savings?
- If you don’t have enough savings, how much more savings will you need?
- If you have to prune your Bucket List given your available resources, which goals should go?