Income Planning

Planning strategies for creating and taking income once you have retired may be just as important as your original retirement planning for accumulating wealth. 

We will look at so-called ‘guaranteed’ income sources such as a company pension or a federal pension if you worked for the government. We will also look at any military benefits. If you own any annuity contracts, they can also be used for guaranteed lifetime income.

Likewise, within the broad Income Planning umbrella, we will do some Social Security planning. We can examine the benefit you are projected to receive and come up with a strategy for the most opportune time to elect that payment to begin. If there are any extenuating circumstances such as divorce or death of a spouse, we can examine the best strategy to claim your benefits. We will also look at what percentage of your social security will be taxed.

Investment considerations vary greatly when doing income planning. Do you have enough in investable assets that you have the luxury of taking only interest income and/or dividend income? If not, how should your portfolio be structured?

A total return approach is often times very appropriate. For example, if you can grow a portfolio by 7% a year and withdraw income by 3% or 4% a year, then at some point the growth will allow you to give yourself a raise. This concept is quite important in an inflationary environment.

How does the trend in interest rates affect the income portfolio? In a declining rate environment it may make sense to lock in long term rates. However, if rates are rising then a very different approach is needed. 

Security selection for income is quite involved and varied. There are corporate bonds, government bonds, preferred stocks, dividend stocks, option income, convertibles, floaters, REIT’s, MLP’s, etc. These are just some of the types of investments to consider.

As you can see, there are many nuances to income planning and it can be complicated. We can help you plan for the income you need today.