Briefcase Study

July 2014: Briefcase Study

In Briefcase Study, Income Planning, Investment Management, July 2014 by Adam Cufr

Each issue of The Steward will include a brief case study. In it, strategies will be highlighted that we utilize in solving problems and creating opportunities for our clients. We hope you’ll enjoy this case study and find some wisdom in it that may help you in your own planning.

This past month, I have had many discussions with families who are working to arrive at their “enough” number for retirement income. As such, the discussion turns toward how to achieve a high level of financial security during retirement when so many factors are uncertain.

As I have stated before, the typical retiree fears running out of money prior to death more than they fear death itself. I suppose expenses go down after death so that strangely makes some sense. So how does a retirement advisor help retirees stretch accumulated savings over a lifetime, without the risk of running out? One method is to utilize modern guaranteed income products and strategies.

Here are five reasons why guaranteed retirement income solutions may rival sliced bread:

  1. Having guaranteed income for life and the life of a spouse that meets basic lifestyle income needs allows any surplus money to be invested more confidently.
  2. Guaranteed income allows you to sleep better at night and able to focus on the needs of other important people in your life.
  3. Replicate the pension checks of days gone by with a guaranteed income strategy. Pensions used to be standard-issue, now it’s up to individuals to create their own family pension.
  4. A well-designed guaranteed retirement income plan allows a retiree to answer “Yes.” to the question: “Will we have enough?”
  5. Senior citizens are increasingly susceptible to frailty risk, the loss of decision-making ability and general function from age. Locking in a guaranteed income means checks arrive even without remembering to ask for them.

If a retirement free of worry sounds appealing, the follow-up question should be: “How do we do that, exactly?”

Simply put, we can do this for you. If you want to know the nuts-and-bolts, read on.

The process of building guaranteed income needn’t be difficult but it’s not always simple. A retirement income planning session begins with a deceptively-simple question: “If you were to retire next month, how much income would you require each month to maintain your current lifestyle?” Depending on how you manage your budget, you will either know to the penny or you will have no idea. Either way, it’s okay. Part of my role is to encourage and equip you with tools to arrive at your number. Once we determine the number, we’ll subtract certain income sources like company pensions and Social Security from the income need number. The resulting amount is your income gap or liability.

We then solve for the income gap by linking this monthly need with the necessary amount of money needed from retirement savings. When doing this, we have options. In short, we will link that liability to a guaranteed income strategy and any remaining assets can remain in at-risk investments. It’s really the best of both worlds: basic income is guaranteed and investment growth is likely by keeping some assets in the stock market for long periods of time. This is one of the ways to maintain an inflation hedge and budget for long term needs such as long term care expenses and gifts to children, grandchildren, church or charity.

You may ask yourself: “If this is how retirement income planning is done, why have I not heard this from others?”

I’m glad you asked.

Two reasons you have not heard this before you met me:

These strategies are neither necessary nor designed for people who are still accumulating money for retirement. They are for people who are seeking income during retirement.

There are not a lot of advisors who specialize in this phase of your financial planning. Retirement income planning runs counter to the big-name broker model which compensates advisors for accumulating assets, not distributing them. This is one reason that Retirement Advisor Magazine asked me to be a monthly columnist, to teach other advisors how retirement income planning works.

When income is needed for retirement, there is currently no more reliable method than utilizing a combination of guaranteed income products to meet essential expenses and risk-based investments to pay for discretionary expenses and hedge against long term inflation. This combination allows a retiree to relax and contemplate the world-changing effects of sliced bread while receiving a steady stream of checks.

To set up an appointment, call us at (419) 931-0704 or email Start now – find the clarity you deserve.