3 PRIMARY RETIREMENT PLANNING CONCERNS

Ø      Outliving Income;

Ø      Retirement income does not keep up with reality (i.e., the never ending effects of inflation and taxes); and,

Ø      Dealing with life’s contingencies (e.g., changing circumstances, emergencies, long-term care scenarios, etc.).

Question:  Which of the above concerns is the most important one?

Answer:    The one that a client is currently facing.

Solution:   Ideally, a plan should provide a high likelihood of success for all 3 concerns without sacrificing one or more concern(s):  A plan that -

   1.    Provides reliable income, but at a reduced life style or subsistence

          level, is acceptable only to sustain life;

   2.    Provides a comfortable life style for a while but knowingly later

          requires dependency upon working, family and/or society, is unwise;

   3.    Provides reliable income and comfortable life style but cannot adjust to

          contingencies, i.e., real life, is dangerous;

   4.    A plan that provides a high likelihood of reliable income, comfortable life

          style, and ability to adjust to contingencies, is ideal.

R.O.I.’S RETIREMENT PLANNING STRATEGY

First Step:  Relative to a client’s R.O.I. managed portfolio, determine the actual projected dollar withdrawals (not a % of portfolio) from each account by either: 

    1.   Creating a Comprehensive Financial Plan (CFP) that will accurately

          project future withdrawals after accounting for inflation, taxes, et. al; or,

    2.   The Client committing to specific future dollar withdrawals (some

          projections may be needed to determine viability of withdrawals).

Second Step:  Make sure client has an emergency fund (minimum = 3 months of budget), open home equity line, and a 72 hour kit;

Third Step:  Divide client’s account(s) that are subject to planned withdrawals over the current four years into Short-Term (S-T) and Long-Term (L-T) accounts, and then administer them as follows:

    1.   Make sure client has in possession the current year’s projected

          withdrawal;

    2.   Manage the Short-Term account to assure up to 3 more years of future

          projected withdrawals (note that 1 and 2 protect the L-T account against

          up to 4 consecutive down years – something that has never happened in the markets);

    3.   Manage the Long-Term account to help beat the never ending effects of

          inflation and taxes (because the S-T account is so conservative,

          probably increase the L-T account allocation model one level, e.g.,

          Moderate to Aggressive);

    4.   Have an Annual Review with client to see how life, economies,

          laws, and circumstances have changed, and make relative plan changes;

          and,

    5.   Both the S-T and the L-T accounts are very liquid and very diversified to

          deal with contingencies.