In retirement ROI stands for reliability of income*, a far greater concern in these years than return on investments. You can’t effectively chase both at the same time. But you can pursue both goals if you compartmentalize your money based on short-term, medium-term, and long-term goals. 

You may have seen what is called the “risk pyramid,” rising from conservative fixed investments at the bottom to more aggressive growth vehicles at the top. Imagine that pyramid toppled on its side. You would have, at the left, the widest part—the fixed investments. At the right you would have the growth investments. This pyramid on its side is another way to visualize the time sequences in certain types of income planning. 

How does it work? Reliable sources of income such as Social Security, perhaps a pension, and income from a job are calculated first. Then we put in the targeted growth rate, and we use conservative figures. Then we set up four to six segments, usually in five-year payout periods. The first bucket takes you to five years into retirement; the second takes you to ten years; and so on. This process supports the use of the Time Segment Model.

If this sounds like a good plan for your retirement needs, get in touch at www.familywealthadvisory.com for more information.

*ROI Reliability of Income is a registered trademark of Wealth2k, Inc. Used with permission.