The Second Step in Your Comprehensive Written Retirement Income Plan
The following article is part two (risk analysis) of our three-part series on the critical steps involved in preparing your comprehensive written retirement income plan: the retirement income projection. This series is based on content that originally appeared in our book, Momma’s Secret Recipe for Retirement Success, and you can grab your copy here.
In our last installment, we shared details on the very first step in developing your comprehensive written retirement income plan, which is a retirement income analysis. As a reminder, this series is all about completing the three aspects that makeup step one in our four-part process of completing your Retirement Income Projection:
Getting Started on Your Comprehensive Written Retirement Income Plan
The following article is part one of a three-part series where we’ll dig deeper into the first aspect of preparing your comprehensive written retirement income plan: the retirement income projection. This series is based on content that originally appeared in our book, Momma’s Secret Recipe for Retirement Success, and you can grab your copy here.
We’ve shared before how important it is to have a comprehensive written retirement income plan, and today we’re delving into the details of getting started. Step one in the four-part process is to do a Retirement Income Projection, which consists of three aspects:
Income analysis
Risk analysis
Fee analysis
In this article, we’ll walk you through the income analysis step.
The following article on retirement asset allocation strategy features content adapted from the book Momma’s Secret Recipe for Retirement Success by Dan Ahmad, Jim Files, and Jack Canfield. Get your copy here!
At Peak Financial Freedom Group, we talk a lot about retirement asset allocation strategy, and that’s because we want to encourage you to get serious about your retirement security. We believe strongly in a comprehensive, written retirement income plan to tie everything about your money together, which we recommend doing with what we call the “3 Bucket Safe Money Approach.” If you’ve been reading our blog for a while now, you’ve seen articles about Bucket #1 and Bucket #2, where you allocate assets to retirement income and liquidity. Now, we’re going to discuss the importance of Bucket #3 in your retirement asset allocation strategy.
Understand How Big Portfolio Losses Could Impact Your Retirement Security
The following content on market volatility and the risk it poses to retirees is adapted from our book, Momma’s Secret Recipe for Retirement Success. Get your copy here to read more!
We think 15 years is a long time. If you’re 70, then 15 years could represent your life expectancy. That’s why we did significant research on the S&P 500 Index starting in 1999 and ending in 2013, back when we finished writing the text of one of our books titled Don’t Bet the Farm. Because we work with retirees, we wanted to review what had happened over the previous 15 years in the stock market to prepare for what types of pitfalls may lie ahead in the next 15 years based on normal average life expectancies. There was market volatility, and there was growth. But what we ultimately found out was nothing short of astonishing.
How to Fill Your Second Bucket in Our ‘3 Bucket Safe Money Approach’
This article features content adapted from the book Momma’s Secret Recipe for Retirement Success by Dan Ahmad, Jim Files, and Jack Canfield. Get your copy here!
We’ve said it before, and we’ll say it again: You need a comprehensive, written retirement income plan if you’re serious about your retirement security. Your plan needs to tie everything about your money together, which we recommend doing with what we call the “3 Bucket Safe Money Approach.”
We wrote about Bucket #1 here in our first installment of articles on this topic, and you’ll want to read it before you continue below. Bucket #1 is the first step in your planning – the one where you determine how much income you need for the rest of your life and allocate the necessary assets to this pot of money. Bucket #2, which we’ll discuss in this article, is the second step in your planning. This is where you determine how much liquidity you need and allocate assets to this second pot of money accordingly.
Gain Clarity on What You’d Like Your Golden Years to Look Like
We may sound like a broken record, but this bears repeating: A written retirement income plan is critical in setting you up for an enjoyable retirement free from financial stress. However, there are three critical questions you need to answer for yourself in order to clarify and solidify your plan. After all, any retirement plan can only be effective if you truly know what you want out of your retirement, right?
Take the time to ask yourself the three questions below, and make sure you answer them honestly. This exercise will help you sharpen your focus on what retirement means to you and what you want out of this phase of life. Then, use the added clarity to develop the best-written retirement income plan for you.
Everything You Need to Know About Fixed Index Annuities and if They May Be Right for You
What would you guess is a key reason why people decide not to purchase a fixed index annuity with an income rider as part of their overall retirement income plan? It’s not because of surrender charges, fees, or lower returns. It’s because the benefits of a fixed index annuity with an income rider simply sound too good to be true.
Don’t Fall for These Untruths About a Misunderstood Retirement Income Vehicle: Annuities
The following excerpt, written by Leslie Davis, is from our book, Momma’s Secret Recipe for Retirement Success. Get your copy here to read more!
It may sound silly, but I feel bad for the word Annuity because the poor little fella gets criticized on a daily basis! It seems like 50% of the individuals I’ve met think they hate annuities, while 50% think they love them. To me, an annuity is not just a type of financial vehicle per se, but also a collection of valuable benefits.
For example, let’s say you’re having a B-B-Q with your closest neighbors one evening. The neighbor to the right of you owns a beautiful new Tesla, it’s red and shiny, sitting on display in his driveway. You overhear the owner of this beauty telling the neighbor on your left how much he loves cars and wants four more. It just so happens that this neighbor to the left owns a Yugo from the 1980s. The Yugo’s owner responds by saying, “I hate cars, they are the worst, I never want another car!” The word car brings to mind four wheels that get you from point “A” to point “B”, but you can’t put a Tesla and Yugo in the same “car” category, just like you can’t put all annuities into one “annuity” category.
How to use the ‘Three Buckets Approach’ – And Why it’s Important
The following content is excerpted from Momma’s Secret Recipe for Retirement Success, by Dan Ahmad, Jim Files, and Jack Canfield. Get your copy here!
In our book, Momma’s Secret Recipe for Retirement Success, we discuss “The 7 Rules To Live By For Retirement Security,” some of which we have also written about on this blog and you can find linked below:
If you are like retirees we have met with, you probably love the idea of having a “Retirement Planning Roadmap” like this, right? It’s designed to help you plan for retirement income you can count on – for life.
If You’re Following a Faulty Retirement Plan, Now is the Time to Make a Change
The following is an excerpt from Momma’s Secret Recipe for Retirement Success, by Dan Ahmad, Jim Files, and Jack Canfield. Get your copy here!
Many retirees do not have their assets allocated properly to give themselves the highest probability that they can receive a high level of consistent income, will never run out of money for as long as they live, and will never suffer a big stock market loss like 2008 again.
In a previous blog, we described in detail the differences between Stage One of Retirement Planning – Asset Accumulation, and Stage Two of Retirement Planning – Income Distribution and Asset Preservation.
When you meet with your financial advisor, even after you’ve retired, the conversation will almost always be focused on your portfolio. Your advisor will likely talk about:
The growth of your portfolio (even though it actually hasn’t probably grown much).
How the market is doing “so well” and you need to ride the wave.
How you are diversified by having your 20-30 mutual funds.
Adding bonds to the portfolio, if you are worried about risk.
How you are in it for the long-term and no matter what, you should “ride out all market volatility.”
How they have the best money managers.
How they will get you high rates of return.
Maybe they will throw in some technical terms like alpha, beta, Sharpe ratio, and standard deviation.
How it’s best to defer IRA distributions as long as possible, until age 72, to minimize income taxes.
The advisor might say you are now invested moderately, or conservatively, but they don’t define what this means in potential losses. So, your advisor says “moderate” or “conservative,” and you are thinking “low risk,” even though your current portfolio could lose -30%, -40%, or even -50% or more. The risk is likely caused by the portfolio’s primary focus on growth.
