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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Want to Earn $1 Million More Over Your Lifetime? Do ThisIt's simple: Go to college or a trade school. It's an investment that will pay huge dividends for the rest of your life. And the benefits go far beyond money.
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What Impact Does Politics Have on Insurance?Some governors choose their state's insurance commissioner, while other states elect theirs, and that person has power over insurance issues, including rates.
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If You're the Millionaire Next Door, You May Be a Terrible SpenderGood job on all that great saving. Now you need to start spending some of that hard-earned retirement savings on the things you love.
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Who Will Be the Beneficiaries of Your Wealth?Deciding who you want to inherit your wealth, as well as when and how, is a crucial first step in estate planning. Here are the four beneficiaries to keep in mind.
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Confused by Annuities? Making Sense of the Different TypesMany investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
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Talkin' 'Bout My Generational Wealth: Baby BoomersWith retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
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Estate Planning Strategies to Consider as Election NearsAre big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
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How to Get Your Money's Worth From Your Financial AdviserA good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
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Think of Prenups and Postnups as Financial Planning ToolsThese contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
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Congratulations on Your Raise: Three Things to Do With ItWe're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
