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How Are Investments Converted To Retirement Income? – Finger Financial Five #84

Jeremy
Jeremy

“Focus on doing the right things instead of a bunch of things.” – Mike Krieger

How do you convert investments to retirement income?

People are often unsure of how to think about this. Worse yet, many observe the market downturn and believe their retirement is in jeopardy, but this could be far from true.

Here is a good way to think about it….

Have you ever seen one of those big water towers in your city?

You turn on your faucet and water comes out. Retirement income can work in a similar way …

First, you must fill the water tower. Here are a few ways retirees can add water to their tower:

  • Pension income – guaranteed rain?
  • Social Security – guaranteed increasing rain over time?
  • Capital Gains and dividends – variable rain?
  • Inheritance – unexpected monsoon? 
  • Annuity income – steady rain?
  • Interest income – light mist?
  • Cash reserve – extra water tank in your house for emergencies? 

All of the above work to replenish your water tower as you turn on your retirement income faucet and live your life

Let’s talk about capital gains and dividends for a moment. 

There will be droughts and rainy seasons, but over time we count on an average rainfall.

This average rainfall (average return) combined with your other sources of income make up your cash flow during retirement. Yes, there will be days when you need to fill a swimming pool and other days when you just need to wash your hands, but if your investments are managed properly and you live within your means, your cash flow water tower should sustain you throughout your retirement. 

The biggest mistake I see retirees make is in ignoring the emotional side of money. They think more is better and believe they will feel better when they have more. When they do reach a new high-water mark, they find even a slight downturn to be worrisome and happiness eludes them. 

How many wealthy people you know are unhappy? I know many. I also know many happy people who dance their way to spurge at McDonalds. 

Retirement is living your best life. Money is just a tool to help you do just that. 

Joy Lere, Psy.D. wrote,
Financial well-being isn’t a numeric calculation. It’s a sense of safety and freedom, now and later. It’s the ability to pay the bills, cover emergencies, achieve clearly articulated goals and flexibly pursue a meaningful life. Financial well-being is a behavioral endeavor with an emotional overlay as much as it is an economic pursuit.”

Got questions, thoughts, or concerns?

Feel free to call us at 843-970-1049 or email me at [email protected] or CLICK HERE to set up a phone appointment.

On the lighter side, many people move from up north and encounter us locals down south and our different ways of saying things. One word you may hear as the warmer weather heats up, is swampy

Swampy is the stickiness you feel when you go outside in the hot humid weather. Your clothes start sticking to you. 

Used in a sentence, “It was so hot and humid outside, I got swampy walking from my house to the car.”

Hope all is well with you and your family,

Jeremy

Finger Financial Five – 5 points in 5 minutes or less – is to provide you with a weekly shot of useful financial information.  My intention is to share principles, so that you will have more clarity and peace, that help you make better financial decisions.

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA Riverbend Wealth Management.

This content is developed from sources believed to be providing accurate information and provided by Riverbend Wealth Management. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

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