The purpose of creating wealth is to spend it in retirement. But that transition isn’t always so straightforward - it is far more complex than the “safe withdrawal rate” of 4% identified by Bill Bengen in the 1994 Journal of Financial Planning. The financial industry is geared toward accumulation, toward savings, towards an investment account that grows in value. In retirement, the emphasis must change to generating monthly income. Retirement Income planning is more difficult than retirement accumulation planning. Spending money is more difficult than saving it given the challenges revolving around time and uncertainty:
- How long you are going to live?
- How is the stock market going to perform?
- Will inflation be high or low?
- What will your health status and medical expenditures look like?
- Will a major life event change your entire retirement needs?
No two people will answer these questions in the same way. This means a personalized plan, which allows the retiree to take income for life, is the best starting point. It must be a liability-driven investment strategy: A strategy based on the cash flows needed to fund future planned and unplanned liabilities. The focus is on stability of income, not a “safe withdrawal rate”.
At AssetBuilder, we are creating a Retirement Income solution that will plan for the future and rank expenses. That means essentials like housing, food, and transportation are always paid first. If unplanned expenses arise, our solution does the math for you. You can know exactly how an “impulse purchase” or a spontaneous vacation will affect your future monthly income--- before you spend a dime. No more wondering. No more fear.
Our integrated framework will move you smoothly into and through retirement. It will provide you with daily monitoring and reporting, full transparency into your investments, and a seamless transition between accumulation and Retirement Income. This solution gives you full control of your retirement. It recognizes that your life circumstances will change, and your portfolio will automatically adjust to the new reality. You will never have to wonder how much money you can spend. Or how long your money will last.
Finally, there is a smart solution that makes sense. Our Retirement Income solution is the automated investment service that takes the mystery out of retirement planning. It allows you to explore the opportunities of retirement rather than be limited by the unknown.