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Not outliving your resources

A successful retirement strategy should include an assessment of the key expectations you have for your retirement. The strategy should include:

  • Your vision of retirement-lifestyle
  • Spending plans
  • Assessment of whether the plans are reasonable given the sources of income available.

Assessing sources of income should involve two key components. The withdrawal rate and the rate of reliance. The withdrawal rate is simply the amount withdrawn from the portfolio divided by the total amount of the portfolio. Withdrawal rates should incorporate the age of the client, market volatility, portfolio diversification, inflation expectations and other income producing assets. The reliance rate is the percentage of the clients’ retirement income needs that come from the portfolio. The more dependent the client is on the portfolio income the more critical the asset allocation and investment process becomes. Market volatility and unexpected spending changes can affect the longevity of the plan as well as the emotions of the client.

Asset allocation during the withdrawal stage of retirement should be based upon the clients risk tolerance, time horizon, and the risk needed to manage the overall spending plan.

There are quite a few helpful tools to assist you in understanding how your current retirement strategy will work for you. Visit our helpful retirement calculators.

The Granite Wealth team is experienced is leading these delicate discussions to ensure that these important decisions are handled appropriately. Contact us to discuss our approach.