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.
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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.
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Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
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The '8-Year Rule of Social Security' — A Retirement RuleThe '8-Year Rule of Social Security' holds that it's best to be like Ike — Eisenhower, that is. The five-star General knew a thing or two about good timing.
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You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
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Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
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From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
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Your Home + Your IRA = Your Long-Term Care SolutionIf you're worried that long-term care costs will drain your retirement savings, consider a personalized retirement plan that could solve your problem.
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I'm a Financial Planner: Retirees Should Never Do These Four Things in a RecessionRecessions are scary business, especially for retirees. They can scare even the most prepared folks into making bad moves — like these.
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A Retirement Planner's Advice for Taking the Guesswork Out of Income PlanningOnce you've saved for retirement, you'll need your nest egg to support you for as many as 30 years. For that, you need a clear income strategy, not guesswork.
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Why Smart Retirees Are Ditching Traditional Financial PlansFinancial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
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Technology Unleashes the Power of Year-Round Tax-Loss HarvestingTech advancements have made it possible to continuously monitor and rebalance portfolios, allowing for harvesting losses throughout the year rather than just once a year.
