Proper income planning, emergency fund creation gives you confidence in retirement

The art of income planning is not something reserved for those nearing retirement age but a necessary learned skill for peace of mind once your working days are through.

That’s where Bright Wealth Management comes in.

The strategy is not something you can “wing,” where funds are pulled straight from your retirement savings, according to Bright Wealth Management President and Founder Matt Dages.

“We want to create a sustainable income plan so that ultimately you’re not just able to continue to live your same lifestyle. The goal is to expand your lifestyle in retirement, to do more, to have fun, to check off those bucket list items,” Dages said. “And to remove some of the pressure and the stress that comes along with working and living a daily life without having that regular income.”

A common misnomer people have is that they have to make up 100% of their income once retired. Dages explained that having “consistent, predictable cash flow” and eliminating work-related expenses from commuting and payroll taxes will actually free up money.

Even with the knowledge that people typically overestimate how much savings is truly enough, the question of how you prudently measure out your savings remains.

Dages said the first step of this answer begins with evaluating your current lifestyle, expenses and financial goals.

“Maybe you’re going to go out and travel more (in retirement) and you’re going to have more discretionary and more entertainment costs. So, we want to allocate some funds for that,” Dages said. “We need to create a roadmap that essentially is going to reverse engineer that spending plan.”

Some advisors rigidly recommend a 4% yearly withdrawal rate to remain financially secure, but Dages said that rule is “conservative” and not binding with the ever-changing economy. Your custom retirement plan will ultimately dictate what is best.

Creating an emergency fund complements income planning

Whether you call it an emergency or slush fund, having money to fall back on when life’s difficulties inevitably come is paramount.

Dages said $1,000 is a “starting point,” particularly for those gutting their way out of debt.

The first year of retirement sets the tone for how reliable this fund really is, however, as Dages recommended people “have about 6 to 12 months of accessible cash on the sidelines of living expenses.”

Dages said he often sees people have too much cash either in the bank or their savings account when ideally you want the “perfect balance” of cash on hand.

Schedule a complimentary one-hour financial portfolio review online or call 833-777-4296 to learn more about Bright Wealth Management.

The Bright Wealth Management Show with Matt Dages airs Saturdays from 1 p.m. to 2 p.m. and Sundays from 3 p.m. to 4 p.m. on 92.3 FM.

Related

Why it’s important to regularly reevaluate investments when planning for retirementInformed decision-making, not following trends, is key to smart investingWhy preparation is key in creating a plan for retirement savingsHow to make reliable retirement income and why portfolio reviews should be a regular thingHow building an adaptable retirement plan can help save you moneyBuild a retirement plan you can trust with Bright Wealth Management