South Florida Hospital News
Thursday April 26, 2018
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October 2017 - Volume 14 - Issue 4

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Lifetime Planning Income

How do you create an income stream that you cannot outlive? Lifetime income planning considers your assets; your liabilities; and your potential, possible, and predictable income during retirement.

An advisor’s role is to provide you with a realistic breakdown of your lifestyle needs and to define what income strategies fit best. The right advisor is experienced in distribution planning, which is the opposite of accumulation planning. There are differences between wealth building, wealth management, and wealth preservation.
 
Retirement is not just about net worth or assets; it is about receiving lifetime income. You spend your working career struggling to accumulate assets so you can live off of them. Because retirement is a distribution plan, it’s about taking money out, not about putting money in. Without the help of a wealth management team, lifetime income planning is more difficult than accumulating assets.
 
When you are retired, every day is Saturday. This is the end game; the money you worked so hard to earn and accumulate is only the scorecard. Spend your life wisely preparing for retirement in the style you deserve.
 
Physicians should put away 20% of their income to be prepared to retire in the lifestyle they are accustomed to. If you are ambitious and want to retire at age 60, consider putting 25% of your income away every year.
 
When you think about retirement, look at the issues you will have to address: Where will you live and what will the cost of living be? Consider city and state income taxes, if applicable, and the average cost of a home. The climate, cultural amenities, access to high quality healthcare and the costs associated with that healthcare, transportation, crime rates, etc. will impact your retirement years.
 
Durable Income
 
The more investment reward we want, the more investment risk we have to take on. A wise retirement strategy achieves desired financial goals with the least amount of risk. Durable income is a strategy for maximizing the performance of a traditional retirement portfolio to maintain the income necessary to fund the lifestyle you want throughout retirement.
 
A comprehensive financial plan should address principal protection, inflation protection, tax efficiency, long-term growth, and lifetime income. A comprehensive plan looks at your investments in light of market cycles and market corrections. Market volatility often brings havoc to a retirement distribution strategy.
 
Retirement Plans
Retirement Plans involve sophisticated areas of the law. Work with retirement plan specialists who are knowledgeable and current on all retirement strategies and tax laws.
 
Questions you should ask your pension advisor about retirement plans:
•   What types of retirement plans are there?
•   How do they work?
•   What are the differences between plans and which ones are best for me?
 
There are 7 different types of retirement plans that you should consider as you think about retirement:
 
401(k) Defined Contribution Plan: an employer-sponsored plan established for the benefit of its employees. The employees may contribute their own money subject to IRS guidelines. The employer may choose to contribute on a year-to-year basis. In this type of plan, the value or benefit at retirement is undefined and unknown until the funds are withdrawn. Your actual plan value will be based on the performance of your investments.
 
IRA: a personal retirement plan, used when you are self-employed or your employer does not have a retirement plan in place. This plan is subject to IRS guidelines and restrictions.
 
ROTH IRA: a personal retirement plan also, that does not offer a tax deduction in the year you invest the money, but the money grows and can be taken out free of income tax, subject to IRS guidelines and restrictions.
 
SEP: a simplified employee pension plan provided by an employer for the benefit of its employees.
 
Roth 401(k): an employer sponsored plan established for the benefit of employees. The employee can make after-tax contributions, which means they will not get a tax deduction for the contributions. The Roth 401K offers tax-deferred growth. Tax-free withdrawals are permitted if IRS guidelines are met.
 
Defined Benefit Plan: an employer sponsored plan where the benefit at retirement is known before retirement. The employee can put away a specific amount of money for retirement, get a tax deduction on the contribution, have the proceeds put into a fixed, guaranteed account, and receive a guaranteed lifetime income at retirement.
 
Profit Sharing Plan: an employer sponsored plan where shareholders agree to distribute profits to employees for retirement.
 
Every company and plan design is different. Consult your advisors to determine the appropriateness of these products, what options are best for you, and costs. Be sure to also review the prospectus and disclosures.

For more information contact Howard Wolkowitz, Financial Advisor, at HWolkowitz@FinancialGuide.com or (954) 558-3673.

 
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. [www.SIPC.org] OSJ: 2400 E Commercial Blvd., 11th Floor, Fort Lauderdale, FL 33308. (800)320-4180. CRN201909-218703
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