How to Create a Retirement Income Plan That Lasts

Creating a retirement income plan that truly lasts is a journey, and I’m here to guide you through it. At Forward Path Advisory, we believe retirement is your time to enjoy the fruits of your labour. Be it traveling, spending time with loved ones, or pursuing hobbies. To ensure you can do all this without financial worries, it’s essential to have a sustainable retirement income strategy in place.

Understanding the Three Stages of Retirement

Retirement Planning isn’t one size fits all; it evolves over time. Let’s break it down:

 

1. 1. Early Stage (Ages 65-75): this is typically when you’re most active, traveling, exploring new interests, and ticking off those bucket list items. Many of my clients find themselves taking multiple trips a year during this period.

1. 1. Middle Stage (Ages 75-85):  at this stage, activities may gradually slow down. You might consider downsizing your home, perhaps moving to a townhouse or a community that offers more security and less maintenance. It’s a significant decision, emotionally and financially, especially if you’re leaving a family home filled with memories.

1. 1. Later Stage (Age 85+): here, daily activities become more limited. Health considerations become more prominent. Discussions about aged care or nursing homes might arise. Planning ahead can ease the transition and ensure you’re well-prepared for any eventuality.

Crafting a Sustainable Retirement Income Strategy

To support your lifestyle throughout these stages, it’s crucial to have a plan that balances immediate needs with long-term growth. At Forward Path Advisory, we focus on:

 

• • Short Term Goals: Ensuring you have readily accessible funds for immediate expenses and spontaneous adventures.

• • Medium Term Goals: Allocating resources for the next 5-10 years, balancing growth and security.

• • Long Term Goals: Investing in assets that will support you in the later years, considering factors like healthcare costs and legacy planning.

We utilise a “bucket” strategy, dividing your assets into “short” “medium” & “long-term” buckets to manage risk and ensure a steady income flow.

Retirement Withdrawal Strategies

Determining how much to withdraw and when is pivotal. We tailor withdrawal strategies to align with your lifestyle and market conditions, aiming to preserve your wealth while meeting your income needs.

Building Your Retirement Plan

Creating a retirement plan starts with understanding what’s most important to you. We begin by discussing your:

 

• • Goals: What do you envision for your retirement in the short, medium, and long term?

• • Risk Tolerance: How comfortable are you with market fluctuations? This helps us determine the right mix of investments for you.

By aligning your goals with your comfort with risk, we create a financial plan that’s personally tailored for you.

Exploring Retirement Income Sources

Diversifying your income streams can provide stability. Potential sources include:

 

• • Dividends from Shares: Regular income from investments in established “blue chip” companies.

• • Annuities: Financial products that offer guaranteed income for a specified period or for life.

• • Rental Income: Earnings from investment properties.

We’ll assess which combination suits your situation best, ensuring you have a reliable income-stream throughout retirement.

Retirement Budgeting Tips

Understanding your expenses is foundational. Start by tracking your current spending to identify essential costs and areas where you may consider cutting back. Consider how your expenses will change in retirement while you might save on commuting, you could spend more on travel or hobbies. Historically, a single person needs around $40,000 annually for a comfortable retirement, while couples require between $52,000 to $62,000. However, everyone’s personal situations are unique, so it’s essential to tailor your budget to your specific needs and desires.

Long-Term Retirement Planning

Thinking ahead ensures you’re prepared for the later stages of retirement. This includes planning for potential healthcare needs, considering long-term care insurance, and discussing your wishes with family and any appointed financial or medical power of attorney. By thinking ahead early, you can make informed decisions that align with your values and provide peace of mind to your loved ones.

Avoiding the Risk of Outliving Your Money

A common fear we encounter regularly is running out of money. To mitigate this risk:

 

• • Regular Reviews: We meet with you annually to assess your financial situation and make adjustments as required.

• • Flexible Withdrawals: Being adaptable with your spending can help preserve your nest egg during market downturns.

• • Growth Oriented Investments: Even in retirement, it’s essential to have a portion of your portfolio focused on growth to combat inflation.

By remaining proactive and flexible with our clients, we aim to ensure your resources last throughout your retirement years.

Remember, retirement is a journey, and with careful planning, you can enjoy every step of the way. At Forward Path Advisory, we’re here to help you navigate this path, ensuring your financial well-being aligns with your dreams and aspirations.