Making Your Money Last

4 Ways to Map Out Your Retirement Journey

Before you set out on what could be a 30-year-long road trip, you’ll need a good map.

From technical glitches on the New York Stock Exchange to economic turmoil in Greece, in today’s information era of 24-hour news cycles, it can be easy to let emotions seep into your investment decisions. As you approach and transition into retirement, buy-and-hold waiting games in times of double-digit fluctuations can be scary and impractical.

The good news is that there is a way to help find some consistency and stability during turbulent markets — without trying to time the market. The key: a comprehensive income plan.

Think of retirement as a cross-country road trip. Sure, the vehicle you take is important, but would you leave your house without a map or GPS? You may encounter some construction or detours along the way that require some minor recalculating to get back to your original path; however, you use the map as a tool to guide you back on your way.

Many times, investors let market diversions completely uproot their investment strategies—the financial equivalent of throwing away your map, parking on the side of the road, or even stopping to sell your car midway through your cross-country adventure. There is a better, more practical way to invest in retirement. An income plan can help create a dependable financial navigation system to take you through your retirement journey — whatever it may bring!

1) Establish your wants and needs. The first step to any successful plan is identifying how you want your path to look. Where do you want to go, what do you want to see, and what are the dollars and cents you will need to do it? Detail the expenses you’d expect for this journey.

2) Identify your income sources. As the paychecks come to an end, what sources of revenue do you anticipate from Social Security, pensions, rental properties or other retirement ventures? By knowing your expenses and income, you can identify the difference you need to fund the gap.

3) Create dependable income. With your income needs established, and after factoring in taxes and inflation over what could be several decades of retirement, you can design a plan to provide the steady, predictable income you need. If you know how much you need to cover your remaining expenses (beyond what the income in Step 2 will cover), you might move a portion of your assets into a variety of reliable income-producing financial vehicles that have low to no market volatility to be sure your retirement paycheck will still come as planned, regardless of what may happen on the news. This could include:

  • Annuities
  • Life insurance contracts paying dividends

4) Carve out an opportunity to sprinkle in some “play money.” One of the biggest mistakes I see retirees make is continuing to invest as if they are still in their working years, which can expose their retirement livelihood to market fluctuations. Whether you thrive on seeing the greater returns of riskier investments or have growth ambitions to maximize your legacy, these types of investments can have their place in a retirement portfolio — when positioned appropriately. Once you have a plan to meet your baseline income needs and be truly comfortable, then you can begin to explore these additional, higher-growth opportunities knowing they may not alter your life plans.

With these steps in mind, you can be well on your way to having a comprehensive income plan built for retirement. By not relying too heavily on the stock market and diversifying investments based on the goals and needs set out for them, your financial GPS is in place, and you can sit back, relax and enjoy the journey.

Steve Post contributed to this article.

About the Author

Christopher Scalese

President, Fortune Financial Group

Christopher Scalese, financial adviser, insurance professional and author of the book Retirement is a Marathon, Not a Sprint, is the president of Fortune Financial Group. Scalese has spent much of his career assisting with the financial transition from the working years to the retirement years. His primary goal is to help structure finances for steady income, while limiting risk and avoiding unnecessary taxation. Scalese is a financial representative and a life and health insurance licensed professional.

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