Two Ways To Bulletproof Your Retirement Income
A good retirement income plan can be your ticket to financial freedom in your golden years
. As you can no longer bank on your savings from your years at work, or your Social Security or pension plan payouts to bulk up your retirement funds, a tailor-made retirement plan based on your portfolio's income, or one that's designed to cover what you've identified as discretionary and essential expenses is recommended.
Portfolio-level income planning is based on your financial needs and the growth percentage you require from your investments to cover those needs. If you need around 5% profit from your portfolio per year, you'll have to develop or modify your portfolio to include investments that pay five percent upwards.
An income plan based on essential and discretionary expenses is more long-term, which needs a clear definition of these expenses based on priority. After you've listed down what these expenses are, you need to identify how much you'll have, with as accurate an approximation as possible. Based on these sets of figures, you'll set withdrawal policies for yourself, which will guide you and tell you what you need to do with your portfolio. For example, you should lower or stop your withdrawal amounts if your portfolio's value drops, and increase withdrawals with profit growth. You should also categorize your assets by time as they give you revenue over certain periods, and withdraw based on these segments. These guidelines will enable you to make better financial decisions so you'll know what to do whatever happens to your investments.
Different people have different needs and financial capabilities, which means that there's no standard retirement plan which works across the board. Your retirement plans can be built around a frugal lifestyle, or one that enables you to afford the high life. Whatever your financial goals may be, make sure that you establish a strong income strategy which can lessen your financial and emotional stress.
by: Carina Smith
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