How will you "Harvest" your retirement assets to fund your retirement? What Withdrawal strategy is right for you?
Choosing the right withdrawal strategy is a crucial element of Your Financial Narrative.
Preparing for retirement is one of the most stressful times that we go through as individuals. Our decision to move forward with a retirement affects those around us. It can change the picture within your own home, it also directly affects the people that you've gone to work with on a day in day out basis.
From talking with and through retirement options with several households, two of the most common stress triggers I hear are: Where will my money come from? and I don't know what I will do with my time.
Where will my money come from? and I don't know what I will do with my time.
From experience, almost everyone finds more than plenty to do with their time once they aren't working.
"Where will my money come from" is what we will focus on with this post.
The most common additional source for retirement is the Social Security Retirement Benefits. The Social Security Retirement Benefits are designed to replace roughly 33% of pre-retirement earnings. That leaves the other 67% to be replaced by your savings and any additional sources of income you have.
You find yourself in a position where you have saved money for retirement and have additional sources for retirement. What is the best way to "Harvest" your nest egg to fund your retirement?
The question is, how do you go about using your funds for retirement?
Some commonly used themes are The 4% Rule, A Bucket Approach, Matching Your Assets to Your Spending. These are just a few of the widely used themes; this post does not advocate for any of them in particular.
The 4% rule:
You add up all of your investments and withdraw 4% of that total during your first year of retirement. This rule includes increasing your withdrawal each year for inflation.
The Bucket Strategy.
In this strategy, your money is assigned into separate buckets. The number of buckets and the length of time is up to your particular plan. The thought is the most extended term bucket has the "risk" assets, and the closest term bucket would have the cash/cash-like investments. The buckets are slowly pouring downstream from long-term to short-term to fund retirement.
Matching Your Assets to Your Spending.
This plan revolves around setting up stages throughout asset planning where your assets pay for your projected spending.
When it comes to retirement withdrawal strategies, there is no one-size-fits-all option. Each of these strategies has its benefits and its disadvantages. Everyone's situation is unique and should be treated
Preparing for Retirement? Ask yourself these questions:
1. How will I meet my living expenses in retirement?
2. Do I have enough money for retirement?
3. What changes can I expect to my life after retirement?
Guess what! Having a Financial Plan can answer all of these questions and many more. The first step to taking control of your financial narrative is to reach out today and set up a Fit Call to see if we would work well together.
Many Financial Plans look strictly at the Cash Flow, with the plans we run for our clients we look deeper to make our plans comprehensive.
What does a comprehensive plan entail?
We work with your already established accountant or tax preparer to help them develop what your tax picture will look like, we help to review your insurance needs and coverages, budgeting, debt structure, asset allocation, and any additional questions that you have. Our plans are agile and constantly evolving with the ever-changing landscape around us.
Keep in mind, Comprehensive Financial Plans are a great way to Take Control of Your Financial Narrative!
If you would like to start the process today of working toward your Comprehensive Financial Plan fill out the contact form below and I'll reach out to you shortly!