Name Your Plan – Select Both Retirement Income & Legacy Target
You know how much income you need and what kind of legacy you want to leave, but what you don’t know is if you might be able to hit those targets. Here’s one way to find out.
Everyone has retirement goals, but the big question is, are they attainable?
Take the 70-year-old woman I wrote about recently. She has $2 million in retirement savings, and she’d like to use those savings to generate $70,000 in annual income increasing by 2% a year early in retirement, but still be able to leave her heirs a $2 million legacy at age 90. Can she do it?
That’s a question many financial advisers might have trouble answering, but after seeing the results of many, many plans over the years, I believe I’ve created a method that can answer her question using Income Allocation planning. While her legacy results will depend on market returns, this planning method incorporates annuity payments into the mix and lowers costs and taxes to deliver reliable income.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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.
Happily, with technology and experience, that analysis is now available to you, too. After considering your personal and plan data, my team will enable you to Name Your Plan by using our tools at Go2Income to solve for the plan design and market return that achieves both your income and legacy objectives.
Our Retiree Names Her Plan
How does it work? To begin, you provide plan data, including your age and gender, marital status, your retirement savings, percentage of savings in your rollover IRA, desired inflation protection and your risk tolerance as measured by the percentage to be invested in stocks. Then we sift through (electronically, that is) the millions of possibilities.
The key driver of achieving both of your objectives is the long-term return in the stock market.
Now we zero in on the plan that will get you what you want. And you may be surprised that the stock market returns affect your results less than you might expect. When they do affect the plan, the impact will be on the legacy you leave, instead of your annual income.
How We Enable You to Name Your Plan
Here is how our retiree refined her objectives to set her twin goals for income and legacy:
- She revealed that 50% of her $2 million in savings is in a rollover IRA, and the balance is in personal after-tax savings.
- With her annual income goal of $70,000 growing by 2% per year, together with a Social Security check that also grows, she believes she will be able to live comfortably.
- Regarding her $2 million legacy goal, she understands that market results and plan design may prevent her from achieving that goal in every year and so is setting that legacy target at her approximate life expectancy of 90.
Recent studies would suggest that her twin goals are just not possible in today’s market. However, after using the Go2Income Income Allocation tool to create her income plan, she can now use the Legacy Planner below to estimate what stock market return it would take to deliver both her income and legacy targets.
Keep in mind that because her personal situation and plan objectives are unique to her, the Legacy Planner is personalized and developed results just for our retiree. (Sharing a “one-size-fits-all” planning tool just can’t get the best results for you.)
ESMR is based on a sampling of plan. A counselor can create your plan.
Balance Your Needs
The Legacy Planner shows that it would take a long-term stock market return of between 6% and 7% to meet her legacy objective — and maintain her income goal. If returns fall short by the time of her passing, remember that her kids/grandkids will have their lifetimes for markets to recover.
In other words, my legacy-income planning method matched the targets of a “live off interest and leave the principal” plan from yesteryear — one that no longer works, given today’s low interest and dividend rates — without putting her retirement at risk.
You can do the same. Visit Go2Income for more information on how Income Allocation can help you reach your income and legacy goals, or contact me to discuss your situation.
-
Stocks Recover from Massive Morning Drop: Stock Market TodayStocks hit their session lows early Monday in reaction to U.S. airstrikes on Iran, but quickly bounced.
-
Netflix Is Dropping Support for Older Devices — Is Yours One of Them?Some smart TVs and streaming devices are already losing access. Here’s how to check and what to do next.
-
I'm a Retirement Editor: Here's the Investing Advice I Gave My SonAs a veteran retirement investor, I'm sharing this advice for your own adult children or grandchildren.
-
Are You Honest With Your Financial Adviser? Why Hiding the Truth Can Cost YouHiding assets or debt from a financial adviser damages the relationship as well as your finances. If you're not being fully transparent, it's time to ask why.
-
5 Actions to Set Up Your Business With Your Exit in Mind, From a Wealth AdviserWhen you're starting a business, it may seem counterintuitive to begin with exit planning. But preparing will put you on a more secure footing in the long run.
-
Missed Your RMD? 4 Ways to Avoid Doing That Again (and Skip the IRS Penalties), From a Financial PlannerIf you miss your RMDs, you could face a hefty fine. Here are four ways to stay on top of your payments — and on the right side of the IRS.
-
What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)The administrative requirements following a death move quickly. This is how to ensure your loved ones won't be plunged into chaos during a time of distress.
-
AI-Powered Investing in 2026: How Algorithms Will Shape Your PortfolioAI is becoming a standard investing tool, as it helps cut through the noise, personalize portfolios and manage risk. That said, human oversight remains essential. Here's how it all works.
-
A Newly Retired Couple With a Portfolio Full of Winners Faced a $50,000 Tax Bill: This Is the Strategy That Helped Save ThemLarge unrealized capital gains can create a serious tax headache for retirees with a successful portfolio. A tax-aware long-short strategy can help.
-
5 Retirement Myths to Leave Behind (and How to Start Planning for the Reality)Separating facts from fiction is an important first step toward building a retirement plan that's grounded in reality and not based on incorrect assumptions.
-
I'm a Financial Adviser: Silence Is Golden, But It Hurts Your Heirs More Than You ThinkTalking to heirs about transferring wealth can be overwhelming, but avoiding it now can lead to conflict later. Here's how to start sharing your plans.
