It’s all about income (in retirement)

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Financial planning for retirement can, simplistically, be divided into two phases:  Accumulation and Distribution.

During our working years, we are in the Accumulation phase and much of our time is spent thinking about whether or not we are saving enough.  Examining the asset allocation, our risk tolerance and how the investments are performing are also steps taken during this phase.

Once we say “goodbye” to the daily grind, a shift occurs to the Distribution phase and our concerns now turn to the importance of reoccurring and guaranteed income.  The planning now focuses on how much cashflow is needed each month and exactly where that cash is coming from.

Prior to retirement it is important to take an inventory of your cashflow needs…. to once again complete a budget so you have some idea of what you will need to live. 

Another important step to take is to visit www.ssa.gov and learn about your estimated Social Security benefits.  Knowing the amount you will receive may assist you in determining what age is best for you to consider retirement. 

Some pre-retirees will also have a pension that will provide income during their retirement years.  Making sure that you know those benefits is also an important step in the inventory process prior to retiring.

With budget determined, Social Security benefits documented, and pension details researched, you are ready to match your anticipated monthly needs with these sources of income.

 If you have not completed this exercise, put it on your “to do” list for it allows you to take any necessary steps to reposition assets to provide for guaranteed income, if that is an area that is not sufficient for your needs. 

Deborah E. Pajak, CFP®, ChFC®, CLTC, CDFA™ is a registered representative of and offers securities, investment advisory, and financial planning services through MML Investors Services, LLC, member SIPC. 5001 Louise Dr. Suite 300, Mechanicsburg, PA 17055 (717) 791-3300. CRN#02009-236751