How to make reliable retirement income and why portfolio reviews should be a regular thing

PHOENIX — Paychecks won’t come the same way when your working days are over, but you can take heart that there are several strategies for a reliable income in retirement.

Bright Wealth Management prioritizes withdrawal strategies that are durable and able to withstand inflation, as even those planning to adhere to the same lifestyle in retirement can be adversely affected if they aren’t careful.

“When we sit down and we build out these retirement plans, we want to build a withdrawal strategy that’s going to adjust for inflation, and it’s going to reflect a realistic lifespan and realistic expenses,” said Matt Dages, founder and president of Bright Wealth Management.

“And quite frankly, a lot of people just go into retirement blindly and maybe just hope that the market works in their favor. And we really want to remove that worry and that stress.”

Besides everyday expenses, it is important to maintain a stash of emergency cash for when the car needs a new battery or the AC is shot. Dages recommended $1,000 as a starting point, but the exact number varies from person to person and can be sorted out with a financial advisor.

Having this insurance alongside automated income — the amount that comes out of your IRA account and/or pension each month — will allow you to stand strong when the economy isn’t the steadiest.

“I think those retirees who rely on the sporadic distributions (such as taking out lump sums), they tend to worry a little bit more and second-guess when the market has that decline or that volatility,” Dages said. “When income is automated … there’s a lot less stress because it feels more structured, it feels more familiar and just like you’re working.”

How should you approach RMDs in retirement

Required minimum distributions, or RMDs, are funds that you have to take out of your 401(k) or IRA every year once you reach 73 years old to avoid being penalized.

Dages said your strategy should be pulling money from these first, which he calls “excessive income,” so you are not unnecessarily taxed on them down the line.

“We want to structure out a plan to say, OK, well, how do we give you some flexibility in that income so that not every dollar that you’re taking out for your life is going to be taxed or not every dollar is going to cost you $1.25 or $1.30,” Dages said.

“We want to start looking at it as soon as possible. … Don’t wait until you’re 72 to say, ‘Hey, what do I have to take out next year?’ We want to start looking at this right now.”

Why regular portfolio reviews are vital

If more grandchildren are on the way or you are pondering an out-of-state move, your financial plan may have to change. Making necessary adjustments doesn’t have to be done alone but instead can be done step by step with a trusted advisor.

General retirement rules like the rule of thirds are guides, but they fail to work for specific people. The Bright Wealth Management Show with Matt Dages defines the rules of thirds as “one-third of your savings should be lifetime income and two-thirds in more readily available investments.”

“Do you just have a 401(k) or an IRA? Do you have other savings, other investments? Do you have a pension?” Dages said. “I know a lot of clients that maybe they have a real estate portfolio that is generating them income as well.”

“We want to look at a broad picture for each individual to build out a plan for them.”

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.

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