As a wealth advisor, much of my time is spent helping my clients prepare for retirement, and a big part of any retirement plan includes saving and investing.
But at some point, you’ll retire. That’s when it’s time to stop saving and start spending. While that might sound great, not everyone finds that mindset shift easy to understand and even harder to actually do.
Whether you intend to stop working in a few years or a few decades, it might be helpful to understand how we work with you to manage your investment accounts and provide you with the income you’ve been planning for after you retire.
The idea that you take the total amount of your retirement savings, divide it by the annual income you want, and in that many years you’ll be broke is not just wrong, it doesn’t make sense. Even though you begin taking distributions, your investments will continue to accumulate.
Here’s how the Ogden Wealth team serve as your partner in retirement:
When you’re ready to start drawing down your retirement funds, we first ask the hardest question of all: “How much a month do you need?” Then set up a plan for when and how you’ll get the money—monthly, quarterly, annually—sent to you however you prefer. We create what I call three buckets for the money you’ll need.
The first bucket is for the cash that you’ll need in the initial one to two years of retirement. We consider appropriate tax strategies based on your new income bracket. If you’re relocating, we might have to frontload the purchase of a home. We talk about your plans and make sure the funds you need are not at risk. This bucket is the source of your annual income and is often kept at the bank of your choice.
Bucket number two is the two- to ten-year bucket, which we invest based on your risk tolerance.
Bucket number three is growth oriented. We invest within your risk tolerance, but this is the bucket we use to fight off inflation—and it’s often the bucket to ignore in a scary market downturn. These are the funds that will continue to work hard for you.
What we put in each bucket is based on what you need and the plan we’ve created specifically for you. The goal is for you to live the lifestyle you want and not get to the end of your life wishing you had made different decisions. You want to have enough, but you also don’t want to leave too many chips on the table. As one of my clients often tells me, “The last thing I want to do is die with too much money.”
It’s important to have a financial planner helping you as you’re in the accumulation or savings phase of your life, but it’s even more important to have an advisor walking with you when you move into retirement to help manage your various assets during those golden years. When you retire, you move from saving into distribution mode, and you need to start thinking about money differently.
Don’t die with too much money. Take that trip, give to that charity, fund that special project—live the life you’ve worked so hard for and do it with confidence. Our goal is that you will say, “I’m so glad I did …” instead of “I wish I had …”
And that, my friend, is a life well spent. I have yet to meet anyone who can take it with them.
If you haven’t thought about a plan for when it’s time to stop saving and start spending, jump on my calendar and let’s talk.
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