Income Uninterrupted

You’ve envisioned your perfect retirement. Now how will you fund it?
By Anthony Pellegrino

IMAGINE THIS: You’re retired. Your patients are in someone else’s capable hands. Your time is yours to fill or fritter away as you like. Your new beginning awaits. How do you fill your days?

Designing your ideal retirement is unique to you. It’s built on your dreams, goals, passions and interests. Where you live, what hobbies you pursue, if you continue to work or volunteer--all of these choices add up to creating retirement that’s lived on your terms.

Achieving this, however, requires a plan. In the last issue, we defined the benefits of holistic planning, creating a comprehensive financial strategy encompassing five key areas of your financial life:

• Investment Planning
• Income Planning
• Tax Planning
• Health Care Planning
• Legacy Planning

Previously, we outlined the importance of designing an investment plan that minimizes risk and fees to maximize growth. Now, we’ll focus on the second key component of a holistic strategy: income planning.

Income Planning: Funding Your Retirement
Income planning is the cornerstone of a confident retirement. It involves answering two crucial questions: 1) How much money will I need in retirement? And 2) Where will it come from?

Unfortunately, there is no Magic 8-Ball or formula that can tell you exactly how much you’ll need. There are unpredictable factors at play: longevity, health, tax laws and inflation all impact your future money. Instead, income planning explores what is known, including your desired lifestyle in retirement and your current and projected assets. A solid income plan addresses the known desires and hedges against the unknown variables to create a plan that allows you to live the retirement of your dreams while protecting you from outliving your money.

Income planning examines five critical components:
1. Social Security Maximization. Knowing when to start taking Social Security benefits can be confusing. Taking benefits too early can not only impact your income during retirement but can also increase your tax liability. We can help you make decisions regarding your Social Security benefits, and also help you understand possible scenarios for your spouse’s Social Security benefits if something happens to you.

2. Income and Expense Analysis. Do you have a thorough understanding of where your money goes now? If you don’t, it’s time to dig into the numbers and understand your cash flow. Your Income & Expense Analysis looks at expected basic expenses in retirement (food, shelter, clothing) and desired lifestyle expenses (travel, hobbies, leisure). Knowing these numbers can help identify how much income you’ll need in your retirement years, and also plays into other parts of your overall financial picture, including tax and investment planning.

3. Inflation Plan. Future inflation is an unknown variable. We cannot predict exactly how much basic goods and services will cost in 20 or 30 years. Health care, especially, is one area where inflation is especially high--and is an increasing expense for retirees. A solid income plan hedges against inflation and looks at potential future income needs.

4. Spousal Plan. Losing a spouse can dramatically impact the surviving spouse’s income— not only in retirement, but especially during working years. A spousal plan is used to provide for the surviving spouse’s care, using tools such as Social Security planning and life insurance.

5. Longevity Protection. Medical advancements are allowing people to live longer, more active lives. The underlying goal of an income plan is to ensure that your income lasts as long as you do, adapting with your changing needs throughout the years.

If you have questions about your financial strategy or are looking for strategies to help you lower the amount of taxes you’ll pay, we can help.

Anthony Pellegrino is the principal of Goldstone Financial Group. As seen on CBS 2 Sunday mornings as the co-host of “Securing Your Financial Future.” Visit goldstonefinancialgroup.com for more information. Investment advisory services offered through Goldstone Financial Group, LLC, a Registered Investment Advisor.
Income