Properly blending tax-efficient income sources along with an intentionally designed asset spend down plan has a direct impact on the quality of your lifestyle in retirement.
Distribution planning experts are few and far between in the financial advisory space in the U.S. Most advisors, along with large investment companies, primarily focus on the accumulation of assets and the growth of investments utilizing traditional vehicles such as stocks, bonds, mutual fund, exchange-traded funds etc.… The revenue earned by the advisors and large investment companies is primarily derived from asset management fees on the underlying investment accounts. There is nothing wrong with this model and ultimately everyone should win if the accounts increase in value consistent with the markets.
There are major problems working with strictly accumulation-focused advisors and companies during your distribution years in retirement.
- The rules are much different in distribution.
- The risks are much different in distribution.
- The consequences can be devastating in distribution.
Think of the Accumulation Phase as the ascent to the peak of Mount Everest and the Distribution phase is the descent. If your entire family and loved ones are with you at the top of Mount Everest and you can’t get them all safely down the mountain, what was the point of going up there in the first place? This is the time to make sure you have an experienced Sherpa specialized in the knowledge that it takes to get down the mountain and the tools needed for your family to make it safely home. The tools and advice you needed on the way up Mount Everest are drastically different on the way down. One major slip on the way down and it’s all over with very little chance to recover.
Retirees continue in their attempt to use old tools, techniques and advice that got them up the mountain and they try to get back down the mountain in the same fashion. Did you realize that almost 2/3 of all the deaths on Mount Everest occur on the way down, not up? Distribution retirement planning is not much different when using old
tools, techniques and advice.
Now is the critical time to seek out team members that can get you and your family safely home. Have your team in place before your descent and make sure your plan will work for you and your loved ones with the least amount of risk and injury. There are no do-overs in retirement.