Retirement doesn’t have to be complicated. If there is one thing retirees need before they head off into their golden years, it is simplicity. Simplicity will serve them well, as well as the family members and caregivers who will be by their side long after they are able to make decisions for themselves.
Simplicity starts with planning, and that is what Retirement Care Plans stakes its reputation on: creating and implementing financially sound, tailored retirement income plans that start with the big picture so the minute details can be brought into focus when it comes to executing the plan. Once in place, our plans are easily understood by our clients and those who may find themselves in charge of the care for our clients.
Retirement Simplified
Although there are many ways to retire comfortably, all sound retirement plans consist of three elements.
- Sufficiency
- Durability
- Flexibility
Sufficiency begins with adequate planning of what your future expenses will be going into retirement. This means taking account of all fixed costs and variable expenses. Most clients we assist tend to want a minimum amount of guaranteed income to be achieved to cover all fixed cost. These guaranteed sources include social security, pensions, and privately owned annuities. This provides them with the peace of mind that allows them to make the decision to retire in the first place.
Durability consists of those sources of income which may be considered guaranteed by direct or indirect contacts held by the client. Durability in a nutshell means that the income will continue to flow despite what might be happening in the world politically, in the markets, and abroad in this age of foreign wars. We find our clients have little tolerance for variability in the amount of income to cover both their fixed and variable expenses; therefore, direct contract and some indirect contract vehicles are what make up the largest portion of a retirees retirement income. We understand that our retired clients have little interest in having their retirement income subjected to the markets at times are dramatically affected by the political climate at home and instability abroad with war breaking out in the middle east in a complete shock to the world, and the protracted war in Europe.
Direct contract vehicles give our clients peace of mind. A direct contract investment is one in which our client holds a direct obligation with an issuing organization. A pension is a direct contract obligation. A U.S. Treasury bond is a direct contract with the investor fully guaranteed by the U.S. Government. A certificate of deposit (CD) is also a direct contract vehicle which carries a guarantee from the U.S. Government through the FDIC. An annuity contract is also a direct obligation between the contract holder and the insurance company, guaranteed by the insurance company’s full faith and credit.
Indirect contract vehicles are less secure, as you are not the actual owner of the contract, but a partial owner along with other investors in a pooled investment. An example of an indirect contract vehicle may be a bond fund. The reason I highlight “bond funds” in this post is because bond funds can give a false impression about security. What could go wrong? After all, bonds are safe and are not stocks; and funds are diversified. A topic for another day will be the perils of bond funds, but for the sake of this post, just suffice to say ending a contract early as a contract owner is rarely a good thing. Typically, there will be adverse consequences.
No contract vehicles are your stocks and mutual funds that own stocks. There is not contract between the company and you to promise you a return of your principal invested. Your chances of getting your money back and a return on your investment is strictly based on the success or failure of the company and the underlying market. At this point in many of your lives, the idea of subjecting your required income to this type of chance investment is daunting. However, over a long period of time, growth-oriented investment like this may be necessary as a hedge against inflation as the cost of living might outpace your guaranteed income. A carefully crafted plan to utilize the power of non-contractually guaranteed investments which.
Durability is what gives our clients peace of mind once they are receiving their guaranteed income into their bank account on a monthly basis. We prefer our clients not to be market watchers, not to be overly concerned about the effects who is in office might have on their portfolios, and how global affairs will influence our domestic markets. We prefer our clients focus on enjoying the retirements they have designed and sacrificed for. Therefore, we create income strategies using direct contract and limited indirect contract vehicles to give them the confidence to enjoy their retirement without worry.
Flexibility is mentioned last but should not be considered least important. If your retirement income plan does not allow for unforeseen circumstances you really don’t have a plan at all. Hope is not a strategy, and we have yet to work with a family that doesn’t have unexpected expenses come into play. Sometimes this might be a large home repair, or a new car, but the odds are there will be health issues that arise. In addition to sufficient cash reserves, because Medicare does not cover everything, we recommend clients create flexibility by considering the purchase of long-term care insurance or life insurance with a critical care rider, and a strong Medicare supplemental or Medigap policy. A dedicated pool of resources greatly simplifies the decision-making for family members and caregivers.
Taking the time to craft a detailed plan keeping these three keys at the forefront will help provide the worry-free retirement we all dream of. Of course, the selection and management of your assets will require the help of at least one professional. Hiring an experienced CFP® (certified financial planner) with a focus on income planning ensures a not only a high level of expertise is applied but also a fiduciary standard of care to assist you in your planning needs. This is the value of working with Retirement Care Plans. Every care plan is constructed with the help of and reviewed by a CFP ® before being presented to our clients.