How will you manage a worry-free lifestyle in retirement?

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retirementBY HAITHAM “HUTCH” ASHOO

Four Factors to Consider For a Worry-free Retirement:

  1. Ridged, pre-planned retirement income methodologies are dangerous!
  2. Look for retirement income strategies which allow for foreseeable and unpredictable life changes
  3. Don’t let advisors sell you on so-called proven performance strategies, they would only be betting with your hard earned portfolio
  4.  A worry-free financially secure retirement means you enjoy activities, people     and causes near and dear to your heart, while others worry about the details

A million dollars may have sufficed for our parents to maintain their standard of living in retirement, as baby boomers we will need millions to achieve a financially secure retirement. Many highly successful families earn incomes into the seven figures, many more earn high six figures. Such families’ travel, entertainment, gifting and medical expenses may dictate they maintain the same income level they enjoyed during their working years.

We have researched retirement income strategies and wealth advisers and financial planners tend to implement on behalf of their clients. Many suggest if inflation is running at three percent and you receive an income of five or six percent per year from your investments, while they perform at a rate of six to eight percent, then you are home free. Unfortunately this form of planning may be hazardous to your retirement future since no one can assure you of your future portfolio growth. Don’t fall for their performance or strategies stories, no matter how good they sound.  They would only be gambling with your hard earned portfolio! We have shared much more about the subject matter in our recently-published hard cover book The Art Of Protecting Ultra-High Net Worth Portfolios And Estates, Strategies For Families Worth $25 Million to $500 Million”, sold on Amazon.

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We have also been asked by investors why not live on the growth of the portfolio from the previous year, this would leave the principal intact. Our response is what if the market is negative for a year, two or three? How will you live?

Since 1988 we have been studying quantitative retirement income methodologies and we have concluded that many of these methodologies have massive uncontrolled assumptions. Furthermore, since the stakes are so high during your Golden Years, we believe you deserve a better solution.

Retirement income methodologies seem to follow the path of fear and scarcity. Typical advisors would ask you “what if we pull too much income out and run out of money?” We on the other hand wonder, “what if you take out too little income and it’s too late by the time you find out to enjoy the full extent of what you have worked so hard all your life to accumulate?” How might that affect your retirement lifestyle? What would you have missed out on in retirement?

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We are very fortunate in that we work with families we admire, respect and trust, most have more wealth than they will spend. Our process encourages these families to envision and achieve the best lifestyle they can afford without sacrificing their financial security.

What if inflation is running high? What if the markets are behaving or misbehaving? What if you desire a higher lifestyle income level? Or, what if your child’s life pivoted on a $750,000 experimental cancer treatment which your insurance company won’t cover? The families we deal with live in the real world, with foreseeable and unpredictable life changes (divorce, death, retirement, business sale, terrorism, market volatility etc). These clients’ goals are very important to them, which makes them critically important to us.

One of the most valuable things wealth managers should provide you are their ears (listening to you) and hearts (understanding what’s important to you). Your advisor should help you identify and prioritize your life-goals. We would recommend you start with a “what’s important to you conversation”.

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Once your priorities are determined, your advisor should offer you what-if and trade-off scenarios to illustrate what you have to gain or sacrifice via a particular lifestyle/income.

The retirement analysis and answers your advisor helps you arrive at are as much about your personal values as they are about your portfolio values. Helping families live a hassle-free and financially secure future is what our jobs are as wealth managers. Your planner should never accept the status quo and should be constantly updating and adapting your plan to the myriad of life-events, both within and outside of your control.

We conclude by suggesting that the best worry-free retirement income plan is driven by an advisor who understands your values, goals and income needs. An advisor who understands that income adjustments need to be made due to life’s changes. An advisor who doesn’t alarm you when income reductions are needed and would help you reduce your spending level gradually.

You need an adviser who recommends a pay raise for you when your portfolio gain over a period of years justifies it, one who you trust and who can send you a quarterly or monthly income check. Let your advisor worry about the portfolio management and fluctuations while you enjoy your family, causes and activities near and dear to your heart and your retirement.

Our clients have lived through the longest bear market of our generation (2000-2002) as well as the great recession, and we have yet to have any of them run out of money. Some had to make minor adjustments to their lifestyle, many others didn’t. Remember, while there is no “retirement income silver bullet”, values based dynamic analysis can offer you the worry-free financially secure retirement you deserve.

Haitham “Hutch” E. AshooHaitham “Hutch” Ashoo and Christopher Snyder are privileged to have worked with ultra-high net worth families, some of whom attained wealth reaching $400 million, helping them achieve a positive change in their lives and finances. They co-founded Pillar Wealth Management, LLC, an independent, fee based, private wealth management firm in Walnut Creek, California. With over 50 years of combined experience and as their clients’ go-to advisors, they are brought in to help with investment management, strategic planning, asset allocation, risk control, and tracking of their clients’ progress towards life-goals. Their services are provided to a limited number of clients. They only accept a new client when they have determined that there is mutual admiration and respect and only if they can add substantial value to the client’s financial life. Learn more at http://pillarwm.com

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