Retirement

Retirement planning involves two stages: planning for retirement and living in retirement.

Planning For Retirement

Consolidating your retirement savings makes working toward your long-term goals much simpler. You can see how everything fits together and make sure your assets are working towards where you ultimately want to be.

First, it gives you a clear picture of how your assets are allocated, which is the core of any solid retirement plan. Asset allocation refers to how your investments are divided up among various asset classes: stocks, bonds, real estate, cash, and alternative assets.

Second, consolidation lets you know exactly what you own. It lets you know that you are properly diversified, and that your assets are allocated properly in line with your ideal risk tolerance. It also highlights when it’s time for portfolio rebalancing.

Living In Retirement

Retirement planning is a lifelong process. Managing your investments in retirement means ensuring that your assets continue to grow to maintain your purchasing power and avoid outliving your savings. It also means ensuring they provide you with a steady income stream. Your Stafford Thorpe advisor will work with you to develop a retirement income strategy. The first step is taking stock of all your income sources, including pensions, investment income, rental income, and maybe even work income.

Next, you estimate your expenses including both essential and discretionary expenses. Essential expenses are necessary outlays that are difficult to eliminate or reduce, like insurance premiums, food, taxes, utilities and health care. Discretionary expenses would include travel, entertainment, luxury items, and charitable donations. These make life enjoyable, but they are not critical.

The goal of an effective retirement strategy is to have your assets outlive you. While nobody can predict how long they’ll live, actuary tables provide a starting point for calculations. We also must factor in inflation. Striving to outpace inflation often involves maintaining an equity asset allocation. Your advisor will recommend suitable stocks that have growth potential and are in line with your risk tolerance after retirement.