If current events are influencing your decisions, you may want to step back and evaluate your strategy.
When the daily news is filled with discussions about inflation, rising rates, market volatility, shortages of essential goods, and endless other angst-producing events, how you react could make a difference in your financial outcomes. These tips may help you sort through the noise and create an action plan that fits your situation.
The first step is to evaluate. Do you have a current retirement income plan that you have been following? If your plan is documented, it is likely that it includes how much cash flow you need to meet your day-to-day expenses as well as for discretionary spending. Pull out your plan and take a look to determine where adjustments might be applied.
If you do not have a plan or it has not been updated to reflect your current circumstances, document your assets, your income sources, your expenses, and your debt. Gathering all the information in one place helps clearly define your total money picture. In the process, you may uncover expenditures that can be reduced or eliminated. A few adjustments may be enough to reduce the pressure on your income flow.
2. Retain or adjust
If your plan is addressing your current needs, it can be reassuring to confirm that your plan is working as you had expected.
If your income needs no longer match your income plan, depending on your circumstances there are actions you may want to consider to get your plan on track. These may include:
- Altering your withdrawal strategy to change the amount in taxes you pay on your retirement income to give you greater spending power
- Reallocating your assets or temporarily reducing withdrawal amounts to address any concerns about drawing down your investments in a down market
- Including inflation-indexed investments or other income-generating strategies in your portfolio
- Adding an annuity with income protection, which may help ensure an income stream that lasts for life, even in the event of poor market performance. A variety of annuities, such as variable annuities, registered index-linked annuities (RILAs), fixed indexed annuities, and immediate annuities, may provide income protection. One of these products may be appropriate for a portion of your assets, depending on your specific needs and risk tolerance.
Your advisor can help you explore how alternatives such as these may fit into your strategy. Indeed, both your tax advisor and financial advisor can be helpful partners in assessing your situation.
3. Periodically revisit and adjust again, if needed
Regular reviews of your income flow and your income strategy are helpful to identify if changes are needed in your strategy or to confirm that things are working as you planned, particularly in the current economic and market environment.
These are just a few examples of changes that could help your retirement income deliver on your strategy. Your financial advisor and legal and tax advisors are available to review your specific situation and help you address your changing needs.