Why You Need To Plan For Retirement
Part 3 of 3-Part Series
All of these factors and many more are built into a well-structured retirement financial plan by your financial advisor. The main pillars of a retirement structure are the accumulation and deaccumulation plans. An accumulation plan is a strategy in which you contribute a set amount of money to your portfolio on a regular basis to continuously build up your investment which will in turn, yield a bigger return.
A deaccumulation plan is what is needed during the actual retirement phase of your life. You’ve grown your portfolio to support your lifestyle when you stop working, but it’s not as simple as withdrawing all the money and using it. This deaccumulation plan is actually much more complex than the accumulation because it must now efficiently manage a diminishing fund as you live off of the portfolio. How and when you withdraw is important because you want to structure the sequence in order to pay the least amount of tax possible. And when you have withdrawn, managing your spending is more vital than ever before since you no longer have an income to contribute to your portfolio. Because of this same reason, your portfolio risk must be very well managed to mitigate as much as possible. It must also account for pensions, Old Age Security, mortgages and equity and how to most efficiently pass on your wealth to your heirs.
The more you get into retirement planning, the more you start to realize it’s not as simple as just saving up money for your golden years. It’s a process which is best started early, when you are earning an income and can afford to weather any financial storms that may come your way. Once you are in retirement, it is very difficult to fix any mistakes that may have been made or go back to work in a world feeling younger and younger to us every year.
We get it, no one likes to think about a time where death is closer than further. It is much easier to put off for later since it’s so far away from now. But a well-built plan for your retirement can have you living the best time of your life after 65. Who says you have to stop living when you retire? The lifestyle and goals you want for your retirement are easily achievable with a solid retirement strategy. You’ve earned the right to do the things that make you happy, whether it’s sitting on the porch with your grandkids or hiking to Everest Base Camp. With your financial future secure, worries go out the door and so do you, to wherever your heart desires.