RETIREMENT—A MULTI-PRONGED APPROACH
“I’m going to retire in two months, Mr Adviser. This is your chance to be a miracle worker!” HA!
Most of us know it doesn’t exactly work like that. When you want to retire, one of the biggest challenges you face is replacing your current income with ‘retirement income.’ Where does retirement income come from?
Most people have a multi-pronged approach. Their retirement income comes from:
- Social Security or other government pensions
- Possible private pensions (although these are diminishing)
- Guaranteed income from annuities
- Systematic drawdown of retirement savings (in IRAs, etc.)
- Part-time work
The THREE PHASES of Retirement
We approach retirement from the day we start working. Some of us, unfortunately, start counting the days until retirement then as well (that’s a subject for another day!) While we are working, we are in the Accumulation Phase. This is the time that we are setting money aside for retirement, either by payroll withholding to our 401k or 403b or matching funds from our employer or annual contributions to a Roth or Traditional IRA. Then, about 3-5 years prior to our planned retirement, our focus changes. We are then in the In-Transition Phase.
This is often where people first reach out to us at Faith Investment Services. Let me assure you, we LOVE to meet with people who are accumulating because we believe we have great resources to offer you in that phase. But the reality is, many people wait until they are ‘planning to retire’ to talk to us. When you are “in-transition” you generally start to think differently about what you have accumulated. Maybe you realize you haven’t accumulated enough. Or maybe you don’t know how much income you can generate from your assets. You know that you can’t recover from a huge downturn at this point and you might begin to feel more cautious about investing. These are all normal feelings and we carefully guide folks through the “in-transition” phase.
Finally, you retire! (Woohoo!) This is when you potentially need to start to get income from your retirement savings and you are in the Distribution Phase. If you haven’t had a financial conversation with a professional before this point, it can end up being like our opening line: “This is your chance to be a miracle worker!” Getting help at this point leaves no room for adjustment or ‘tweaking’ your plans. You are done working and you’ll live on whatever you can live on—with fewer choices.
WHAT PART DO YOU CONTROL?
If your health is good and there are no big economic surprises, you might be able to control the timing of this entire process. For some folks, though, a ‘surprise’ medical condition or job loss pushes them into the distribution phase before they expect it.
What is the harm in having a conversation now? In the accumulation phase? In the in-transition phase? Our approach at Faith Investment Services is very lowkey. We only want to work with those who want to work with us—meaning those who will allow a relationship to form so we can be in a great position to help.
We only want to work with those who want to work with us!
If you’d like to talk, there is no cost or obligation. We simply ask that you complete a basic questionnaire that allows us to get an overview of your situation. That questionnaire is your ticket to a conversation. If we can be a help to you, that’s great. If we simply build a connection that might help you in the future, that’s good too.