Congratulations! By the time you start this phase, you’ll have made it very far. Not only have you completed the Foundation Phase, but you’ve been investing for some time in the Accumulating Wealth Phase! Pat yourself on the back. You’ve stuck with it, and now you’re about to reap the rewards of all your hard work.
Getting Started with Phase III
The Strategic Income Phase could also be referred to as the Retirement Phase, since you will now be able to quit your job if that’s what you want to do. But before you quit your job, it’s a good idea to calculate if you’re able to retire comfortably and have enough income to last the rest of your life.
Strategic Income Group offers financial planning services to help you navigate the complexities of retirement. It’s a good idea to sit down with a qualified professional to help you evaluate your situation.
What is the Strategic Income Phase? It’s the phase where you can start spending your retirement assets, preserving some retirement assets through ongoing investment management, preparing your final financial plan, and teaching your children and grandchildren about money management.
There are many questions that arise in this phase. Should you draw earnings from the stock market or should you leave it alone? Should you simply rely on Social Security or bolster it with rental property income? Will you have enough to retire?
Again, it’s very important to understand the risks in retirement before you retire. People are living very long lives nowadays, and you’ll need all those living years financially covered. You’ll also need to understand how inflation works, know proper withdrawal rates from your investments, how to establish a Strategic Reserve Account, and consider long-term care insurance to protect your income just like disability insurance protected your income during the first two phases.
As you’re well aware, with age comes more medical bills, and many times the children have moved out of the house. Life changes, and so do your financial needs.
Perform Continued Needs Analysis
The Strategic Income Phase, like the Accumulating Wealth Phase, also involves needs analysis, which can be conducted by Strategic Income Group which helps clients manage their retirement. Needs analysis in this phase involves forecasting financial needs and financial positions throughout retirement so that you can live comfortably – and even thrive – throughout the rest of your years.
To help our clients navigate the Strategic Income Phase, we offer the Strategic Financial Organizer, a binder that helps us bring together all your financial documents and ensure you have a thorough review of your financial situation by one of our professionals.
Every year, it’s a good idea to make spending adjustments based on your needs and the status of your income sources. You’ll need to maximize pension and complete Social Security analysis so that you can know what to expect.
Stress Test Several Scenarios
Finally, you’ll need to stress test your financial plan for different scenarios. What would happen to your income from the stock market took a dive? What would happen if a tenant moved out of your rental and you couldn’t find a new one for a year? Could you still stand on your financial feet?
We can help you answer these questions and more if you’re having trouble. And again, congratulations on reaching this phase!