Retirement strategies today reflect a post-2008 mindset that places former standards like pensions and employer benefit plans in rearview mirror status. Today, pre-retirees who can no longer rely on those options are looking for safe retirement strategies that can evolve with their situation, cope with economic fluctuations and include non-traditional options for securing “safe” income. —
The rise in defined contribution plans for securing income throughout retirement has lead financial planners to incorporate strategies that de-cumulate assets to generate one guaranteed income source, while looking for other options to ensure a lifelong income stream. Among today’s most sought after retirement strategies are those focused on guaranteeing a base income (with a pension or annuitization), while others are designed to spend down or de-cumulate assets throughout retirement to finance living expenses.
According to investment advisor Reid Johnson, owner of Lake Point Advisory Group and president of PlanMyRetirement.com, in Rockwall, Texas, there are no cookie-cutter retirement solutions since every retiree’s situation is unique. For this reason, Johnson says that LPAG uses a variety of tools in its progressive retirement plan that allows retirees to have, with 100 percent certainty, a guaranteed income once they are no longer collecting a paycheck.
For that reason, he weighs each client’s individual financial status along with short-term and long-term goals and needs that examine issues such as health, debt management and cost-of-living fluctuations.
“Most of the tools we use are geared to helping our clients avoid risk,” Johnson says. “My job is to work with them to determine which strategies would work best for their particular situation, whether it is annuities, equities, a de-cumulation plan or a combination of protocols.”
As a fiduciary, Johnson is legally and ethically bound to act in his clients’ best interest, a designation he says is critical when it comes to advising retirees on establishing a nest egg that will serve them throughout their retirement years.
While portfolio-based strategies formulated to include a suitable withdrawal rate are considered a “safety first” approach, strategies involving pensions or annuitization can have at least some risk, as was made clear by a history of insurance/annuity company failures, and the increasing inability of the Pension Benefit Guaranty Corporation (PBGC) to cover failed pensions.
Trying to take a single-minded approach to retirement planning eliminates strategies that compensate for economic fluctuations, which is why Johnson advocates an adapative financial strategy that can forecast risk factors and compensate accordingly. According to Johnson, the true distinction in retirement income strategies is whether market and longevity risk is retained or transferred, and how risks are managed or avoided if they are retained.
An experienced and competent financial planner can help prepare pre-retirees to adapt to unforeseen bumps in the road by helping clients establish a retirement plan with a guaranteed income for the length of their retirement.
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Release ID: 77870