Safely Traversing The Retirement Danger Zone
Reaching your peak savings goal is only half the journey.
When climbing Mount Everest, everyone enters a very dangerous elevation zone where oxygen is very scarce. In this "danger zone," the human body burns more oxygen than it can take in from normal breathing. Even when supplementing with added oxygen, people must overcome incredible levels of fatigue and exhaustion to make it to the peak.
Some sadly never make it safely back down the mountain. In fact, most people who die on Everest die while descending from the summit. Many make it to the "top of the world," only to fall victim to the "danger zone" on the way back down.
Statistics show that the most critical years for retirement planning are the three years before retirement and the three years after retirement. This crucial six-year window is like the "retirement danger zone." Any serious mistakes in this narrow window of time can have devastating affects on your retirement, driving you to postpone retirement plans, reduce income expectations or even work longer than planned.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This "danger zone" is a great metaphor for effective retirement planning, highlighting a very important aspect of retirement that is often neglected - the distribution and income phase. With the disappearance of pension plans over the past few decades, we must now manage longevity risks, health care costs and stock market risks all on our own. While we are very focused on the accumulation phase of retirement planning—ascending to the peak—we do not pay as much attention to the distribution and income phase—which is like coming safely back down the mountain after having reached the summit.
Remember, getting to the top of the mountain is optional; getting safely back down the mountain is not. While the accumulation phase is very important, planning on how to protect your assets and distribute them in the form of a reliable 20- to 30-year income stream is equally, if not more important.
When planning for our clients' retirement income, we consider many approaches depending on needs and resources. We look at controlling taxable income, managing required minimum distributions, optimizing Social Security and sequence of withdrawals, as well as generating some guaranteed income to fund lifestyle needs.
The guaranteed income really brings a high level of comfort when planning for retirement. To do this, we investigate different annuity options, and in some cases carefully structured cash value life insurance strategies. These approaches are new to some, and can be somewhat complex, so it is imperative to work with an adviser who specializes in this area. When done properly, retirement planning is well worth the effort to get you "safely back down the mountain."
Please watch this video from that explains retirement planning in a very powerful way, and I hope it gets you thinking.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Ian Maxwell is an independent fee-based fiduciary financial adviser and founder and CEO of Reviresco Wealth Advisory. He is passionate about improving quality of life for clients and developing innovative solutions that help people reconsider how to best achieve their financial goals. Maxwell is a graduate of Williams College, a former Officer in the USMC and holds his Series 6, Series 63, Series 65, and CA Life Insurance licenses.
Investment Advisory Services offered through Retirement Wealth Advisors, (RWA) a Registered Investment Advisor. Reviresco Wealth Advisory and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
-
Stock Market Today: Nasdaq Soars Ahead of Tesla Earnings
The EV stock rose nearly 2% ahead of its highly anticipated Q1 earnings report, due after tonight's close.
By Karee Venema Published
-
GM Stock Accelerates After Earnings Beat
General Motors beat expectations for the first quarter and raised its outlook for the year. Here's what you need to know.
By Joey Solitro Published
-
Pros and Cons of Waiting Until 70 to Claim Social Security
Waiting until 70 to file for Social Security benefits comes with a higher check, but there could be financial consequences to consider for you and your family.
By Patrick M. Simasko, J.D. Published
-
How to Stop Boredom From Ruining Your Happy Retirement
Retirees who explore new interests and have an active social life are more likely to find joy — and even greatness — in the newfound freedom of retirement.
By Richard P. Himmer, PhD Published
-
The Life-or-Death Answers We Owe Our Loved Ones
How our life ends isn’t always up to us, but that question too often must be answered by loved ones and health care workers who don’t know what we would want.
By Joel Theisen, RN Published
-
Is 100 the New 70?
Eating well, exercising, getting plenty of sleep and managing chronic stress can help make you a SuperAger. Funding that long life requires longevity literacy.
By Phil Wright, Certified Fund Specialist Published
-
Nine Lessons to Be Learned From the Hilton Family Trust Contest
Disclaimers, good communication, post-marital agreements and more could help avoid conflict in a family after the owners of a wealthy estate pass away.
By John M. Goralka Published
-
Strategies to Optimize Your Social Security Benefits
To maximize what you can collect, it’s crucial to know when you can file, how delaying filing affects your checks and the income limit if you’re still working.
By Jason “JB” Beckett Published
-
Don’t Forget to Update Beneficiaries After a Gray Divorce
Some states automatically revoke a former spouse as a beneficiary on some accounts. Waivers can be used, too. Best not to leave it up to your state, though.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Charitable Remainder Trust: The Stretch IRA Alternative
The SECURE Act killed the stretch IRA, but a properly constructed charitable remainder trust can deliver similar benefits, with some caveats.
By Brandon Mather, CFP®, CEPA, ChFEBC® Published