Broker Check

Designing Your Plan

Establish your goals for your investments.

  1. Which part of your investments can be used to supplement your income?
  2. Are there any special financial goals (vacations, education for grandchildren, legacy desires?)
  3. How much you need to live on?
    • How was money spent last year?
    • What is your budget for this year? Having a plan for every dollar allotted to your income is important.  
  4. How much to you want to live on?
  5. Do you have any debts? Is there anything that is owning you that you should or could be selling? Lowering your debt load to a low amount will help reduce the amount needed to produce an income during retirement.
  6. If you don’t have enough, can you modify anything, defer retirement, or maybe take a part time job that you would enjoy?

Like it or not, your money can only do so much. The rule of thumb is your withdrawal rate should be around 4% at age 65 (obviously at age 90 a more aggressive withdrawal rate could be used). For every 1,000 of annual income ($83.33 of monthly income) you need 25,000 of assets. The goal is to increase this $83.33 per month because of inflation. There is no guarantee of this 4% rule but a more aggressive assumption is more likely to fail in times of poor market performance. That is why we must protect our portfolio from withdrawing from risk assets at the wrong time. “The Income for Life Model” can help. A semiannual review is important if adjustments are necessary.

If I told you there was a new jet going to Florida, that was very quick and would save you a lot of time. However, there is an only an 80% chance of getting there. My bet most people would not get on the flight. That is why we must protect our portfolio from withdrawing from risk assets at the wrong time. “The Income for Life Model” can help. A semiannual review is important if adjustments are necessary.

There are many ways to keep a budget. I use Quicken Deluxe to both keep my “electronic” checkbook and sort my expenses. Making a Microsoft Excel Spreadsheet could also be handy. A sample spreadsheet is attached.

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