In your 30s and well into your 60s, accumulating wealth and saving money is one of your primary goals. It’s the time in your life when you are focused on meeting the needs of your living expenses, building a financially stable foundation, and implementing your savings plan for emergency situations – and for your future.
During that time, you’re working toward daily living, experiencing all life has to offer within your means, and creating wealth and longevity through your short and long-term investments. That stage of the financial cycle is known as wealth accumulation.
Transitioning Into Retirement
When you hit your 60s and 70s and near retirement, you move into the next phase – and everything changes. Your financial planning readjusts into a new period where your circumstances can impact your goal attainment because your ability to generate a working income becomes limited. During this time, the source of your income shifts away from a working paycheck and becomes reliant on pensions, social security, your savings, and investments.
Due to the nature of how funds are collected and used in this phase of the financial cycle, it is known as wealth distribution. At this stage, you are no longer stashing money away into your savings and waiting for a rainy day. Instead, you are living in the freedom of retirement and your golden years, and taking a distribution of funds every month to settle expenses and live the lifestyle you planned.
For some, this change can be challenging.
First, this type of living requires a sizable shift in mindset. You may not be sure which road your life is going to take next, and that stream of income you’ve always had is no longer available. In turn, your goals, functions, and daily living may begin to look much different as you adapt.
Also, you may be entering this phase while bearing the burden of worry, wondering if you “accumulated” enough wealth to last through your lifetime. You may not feel confident that your investment portfolio will boast a reasonable return or that you can live life the way you intended without going broke.
From Phase to Phase
The strategies implemented during each phase should not vary much, so it is paramount that the activities supporting these strategies are carefully planned during both the accumulation and distribution phases. All activities should work together in cohesion to ensure that the accumulated assets are appropriately invested and used to purchase financial vehicles to help ensure that you have enough income to last throughout your retirement.
For many, this transition between the phases and change of mindset requires some adjustment time, which is normal, but it doesn’t have to be stressful. Here’s an approach that may help you have confidence in a retirement income strategy that you've created:
Retirement Income Strategies
Wealth Distribution is when you create and implement a retirement income strategy designed with the intent to help your money last longer and throughout your retirement years.
This phase requires a 360-degree review of your financial situation. To do this, you must consider your current investments and financial vehicles and reevaluate your risk tolerance. This exercise may also require some strategic changes that result in purchasing fixed-income products that carry a lower exposure to risk (such as annuities) and can help to carry you through retirement, not just get you there.
After a financial analysis and review, you should leverage educational resources that allow you to stay in control and make suitable decisions to help meet your financial goals.
Considerations during the wealth distribution stage may include:
- Income strategies focusing on income streams
- Retirement income review and needs outlined
- Social Security claiming options
- Medicare considerations
With proper planning and professional financial advice, the wealth distribution phase should end up being less about managing your funds and more about enjoying the life you’ve built for yourself and your loved ones.
Success in retirement is all about goals. To gain a better understanding of your retirement goals, learn about some of the issues you may face during preparation, and how insurance products and annuities may be able to help you meet those goals, download the Preparing for Retirement eBook.
Stratton & Company provides insurance and annuities, and its representatives do not give investment, legal or tax advice. You are encouraged to consult your tax advisor or attorney or investment advisor.
By contacting us, downloading booklets, or attending events, you may be offered a meeting to discuss how our insurance services can meet your retirement needs.