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.

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The point being, if you would like to avoid feeling empty and disenchanted, you shouldn’t just wing it. Yet it seems that is how a lot of people approach retirement. They wait until they’re into it before they start planning. As a result, things may not work out as well as they would if they had addressed them earlier, and they can end up unhappy and disillusioned. They had grown weary of the daily race of their workaday life, but they may find retirement filled with new anxieties. They can’t seem to slow down.

By deciding your destination up front, you can set your own pace. You will know how much income you need to accomplish your goals and still live comfortably the rest of your days. The “Retirement Red Zone,” as Prudential calls it, should begin five years prior, and probably ten years if you are a business owner. Many people have an investment plan but no overall financial plan.

Visualize the lifestyle that you will find most satisfying and fulfilling. Give your life direction by setting goals so you can anticipate, plan and prepare. Focus on expectations. Start now; download a free chapter of my book DistributionLand (www.distributionland.com) for the strategies and risks to consider as you begin the journey.

The post Welcome To Distribution Land: Make A Game Plan appeared first on Distribution Land.

Everything that happens in people’s lives affects their finances. At Family Wealth Management, we use a program called Money Quotient that helps us get to people’s core values and beliefs and hopes for accomplishment. “Putting money in the context of life™” is Money Quotient’s motto.

The Money Quotient tolls can help with planning your immediate, short range, and long-term goals. We calculate how much those goals would cost, and we try to build an income plan that is designed to accommodate them. If you’re out to top the S&P 500, that’s not what a goal is.

As part of the process, we ask what you want in life. What’s important to you? If it’s a vacation each year with the kids and grandkids, we build that into your plan. If it’s an education scholarship to your alma mater, we set that aside. Whatever you wish to achieve, we calculate it into the target rate of return that would be needed to fulfill it. We won’t go after a 40 percent return just to beat some benchmark. Why would it matter?

When people don’t have a focus, they can wind up competing against financial benchmarks. But when they have a clear vision of their retirement goals, they can start planning to reach those goals instead. That’s why it’s important to start the planning at least five years before retirement, so you can lay the groundwork and begin building.

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For example, you decide to purchase $100 worth of XYZ each month for three months. In January, XYZ is worth $33, so you buy three shares. In February, XYZ is worth $25, so you buy four additional shares. Finally, in March, XYZ is worth $20, so you buy five shares. In total, you purchased 12 shares for an average price of approximately $25 each.

Now, in retirement,as shares go down in value, you have to sell more of them from your account to obtain the same income. It’s dollar-cost averaging in reverse. Think of it as dollar-cost ravaging. See our previous post concerning this.

The post How Dollar-Cost Averaging Changes in Retirement appeared first on Distribution Land.

The First Step Cash Management system** can help ease some financial worries as it allows cash to flow into three accounts or “buckets.” Each of the three buckets holds a specific type of money, and each type of money has a specific use or purpose. This system aids in tracking your spending and knowing where your money is going.

1. The Static Account™ bucket holds money that has been spent or has agreed to be spent at some point in the past, such as mortgage, auto loans, credit card debt, insurance, and utilities.

2. The Control Account™ bucket contains money that will be spent within the next seven days. This account includes daily needs like groceries, pet care, clothing, etc.

3. The Dynamic Account™ bucket stores money that will be spent in the future on things such as charitable giving, debt reduction, vacation, and gifts.

For retirees who feel overwhelmed by the many decisions they face as they enter retirement, a bucket strategy similar to the envelope system that their parents may have used back in the day, may help them divide what they see as one large stress-inducing problem into smaller, more manageable pieces.

*Running Out of Money Worse Th an Death – by: Carole Fleck: AARP Bulletin, July 1, 2010
**First Step Cash Management is owned by Th e Planning Center Inc. and Distributed by Money Quotient, NP

The post Money Management Strategies Revealed: Bucket Your Spending appeared first on Distribution Land.

“I have it there for emergencies,” she explained.

Few of us need access to all of our money at one time. Holding on to $300,000, a large amount of liquid assets, is often squandering potential. The price of liquidity is a low rate of return, and low growth means that inflation may overtake you.

Don’t Overlook This Big Retirement Risk

Keeping direct access to all of your cash is a depression mentality: Some of those who endured hard times held on so tightly to their money that they sacrificed growth and eventually succumbed to the ravages of inflation. Remember your Grandma saying, “A dollar doesn’t buy what it used to buy?”

Be wary of the depression mentality as you approach retirement. If you have a hard time letting go of your liquidity, a financial advisor (www.familywealthadvisory.com) can help by creating a written retirement income plan that spells out the details and strives to make you feel comfortable with your potential future income growth.

The post Beware of the Depression Mentality appeared first on Distribution Land.

Imagine boarding a jet and heading to your seat, only to be told you are needed in the cockpit to fly the plane. That is what has happened in our workplace retirement system over the last 30 years. We have shifted from pension plans managed by professional financial pilots to 401(k) plans managed by passengers. You fuel the plane, you pilot the plane, and you land it. According to a 2014 research study conducted by the American College, 80% of respondents with nest eggs of at least $100,000 in assets, got an “F” on a test about managing retirement savings. It’s no surprise that many people are crashing.

In this post-pension era, you have to create your own cash flow. You have to take that pile and make it last for the rest of your life. Wondering how? Read up on retirement planning strategies. Start with a free chapter of Distribution Land (www.distributionland.com). You need to know some of the different ways to create an income stream so that you may feel more confident about your financial situation. And, you might consider adding the help of a professional co-pilot in a effort to land safely at your destination.

The post Welcome To Distribution Land, Time To Create Your Own Paycheck appeared first on Distribution Land.

I would like to share a story with you.

An accountant and his wife recently came to my office to prepare for their retirement in a few years. They had about $2.5 million in CDs and bonds, and they had figured out how much they wanted in retirement income. They presumed all was well. But my projection showed their portfolio in a death spiral by their early 80s.

“You know what that means, right?” I asked them. They risked running out of money.

“Yeah, it means I don’t believe it, how’s that?” the accountant said.

I showed him the numbers, and as a CPA he understood them, yet couldn’t quite grasp why this would be happening.

“Have you ever seen Jurassic Park?” I asked him.

“Sure. Dinosaurs gone bad.”

“Right. Remember the scene where the boy tells the archaeologist he wouldn’t be afraid of a raptor?” I asked. “The guy shows the kid a petrified claw and demonstrates how a raptor could shred him to pieces. But then he explains that the raptor that would be staring him down wouldn’t be the one he’d have to worry about. In fact, he wouldn’t have to worry about him at all. See, Velociraptors hunt in packs and it’s the ones to the sides that are going to kill you, and you’re never going to see them coming.”

The CPA furrowed his brow.

“You were scared,” I explained, “because you saw that market risk in front of you, staring you down. So you put all your money into CDs and bonds so you wouldn’t have to worry about market risk. But off to the side—and I don’t think you see it coming—are inflation and longevity as well as other risks that may kill you.”

As you plan for retirement and venture forth into Distribution Land, you will face perils. Don’t be afraid. Be prepared. Visit www.mysecondopiniontoday.com for a free consultation and advice on if you truly are prepared with your current financial plan.

The post Beware…..Things May Not Appear as They Seem! appeared first on Distribution Land.

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.

The post ROI in Retirement appeared first on Distribution Land.

If those don’t drain your account, you will most likely deplete it entirely just by living too long. 

Adding guaranteed income products to a traditionally diversified portfolio may provide the potential to capture a portion of market gains, while potentially limiting losses when the market experiences a downturn. Using this model, explained below, can also help. 

Time Segment Model 

A more disciplined structure for creating retirement income. This approach is designed to spread your portfolio across multiple accounts, each designed to produce income over a certain period of time. How each account is invested depends on how soon the money is to be used. Typically, the initial segments are for immediate needs and may therefore be allocated conservatively in fixed rate or even guaranteed investment products such as certificates of deposit or immediate annuities that may not be subject to a fluctuation in principal. Segments designated for later use can be invested more aggressively. Since they won’t be touched for a while, they have time to overcome market corrections. Over time the aggressive segments will be shifted to more conservative products as retirement savings are used. 

Using this model to build your investment portfolio may allow for continued steady income instead of just playing the stock market game of chance. If you aren’t sure that your current plan uses this model, maybe it’s time for a second opinion. Schedule yours at www.mysecondopiniontoday.com for a no obligation assessment of your current portfolio.

All investing involves risk, including possible loss of principal.

The post Money Management Strategies Revealed: Time Segment Model appeared first on Distribution Land.