By David Kopyc
Most Boomers do not have a pension plan and need to take their retirement assets they have accumulated over their working careers and create lifetime monthly income. For most of the boomers the defined benefit pension plan has been replaced by 401k plans that leave the responsibility to you and not your former employer.
Before you make a decision on the investment program that is best suited for your appetite for risk and the ability to weather the storm when markets become volatile, you need to consider the drawbacks of each decision you make. Never make a hasty decision that is irreversible that you may regret.
I’m a major advocate of preparing for this important decision at least three years from your time of retirement and I classify this as the red zone of building your baseline retirement income distribution plan. You need to start taking into consideration social security payments, the size of the pool of money that is going to be used for retirement income, and any other assets that may be calculated into this from savings accounts and any nonqualified assets you have set aside for your retirement years. If you are fortunate enough to have a pension benefit from a former employer than the benefit selection is critical especially if wish to protect a spouse.
Point of entry should also be discussed in great detail with your advisor. Are we in a low interest rate environment, has the stock market been in a bull market or bear market trend, and what is your true appetite for risk. We all remember 2008 and the financial crisis as if it was yesterday. Understanding the risks associated with the markets and doing a careful analysis many months before your retirement date will give you a chance of making a decision that you will not regret.
Finally, it is imperative that the financial organization you are working with offers an open architecture platform that allows you to have access to a wide variety of investment options. There should be no bias toward any type of investment option and there should be total transparency to evaluate if the investment is suitable for your retirement income distribution plan.
Retirement should be a time of enjoyment with family and friends and not a time of high anxiety and stress caused by the financial markets. Your retirement income distribution plan should be specific to you and your family and not one that is based on a cookie-cutter approach. You only get one chance at it, and hopefully it will be one filled with confidence that you have made the right decisions.