Episode #21: Retirement Income Planning

Today’s Prep:

Income planning is an essential part of retirement planning. Learn to examine your income needs in retirement, and join us for a conversation on diversification.

(Click the featured times below to jump forward in the episode)

Equipping Points:

00:52 –  How Much Income Can Mary Live On?

  • Mary has about a million dollars. She wants to know how much she’ll be able to live on each year. Unfortunately, this is a tricky question to answer without knowing how long Mary is going to live. Of Course, there are other ways of going about this predicament.

1:33 – Explaining The Four Percent Rule. 

  • Years ago, there was this rule of thumb called the “Four Percent Rule.” It basically stated you could withdraw four percent of your assets each year from your retirement accounts and live off of that income. Of course, the idea was as long as you didn’t exceed four percent, you’d never run out of money. While it’s a fine rule of thumb, it hasn’t really kept up with our modern economic environment.

3:15 – Determine How Much You Need To Spend.

  • Rather than focusing on how much you CAN spend in retirement, focus on what you NEED. After all, your needs will change throughout retirement. At first, you’ll be more active, and perhaps you’ll do some traveling. As time goes on, perhaps you’ll need more money for doctors visits. Once you know what you’ll need, you can begin the income planning process.

5:00 – Considering Diversification.  

  • You might think you need multiple IRAs to be diversified. However, it really just depends on what’s inside your IRA. If you’re properly diversified within that IRA, it might not be necessary for you to open a second one. Furthermore, you can have multiple IRAs, but if they’re all invested in the same things, you’re probably not diversified.

Today’s Takeaway:

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