The Transition

Building Wealth to Creating Retirement Income

 

Submitted by Tim Whisler, CRPC^®, CLTC^®, Certified Financial Fiduciary^®, President of The Whisler Agency, Peoria IL.

 

As we go through life, we experience two financial stages; the Accumulation Phase and the Distribution Phase. The act of retirement is the transition from one phase to the other. The focus of the Accumulation Phase is building as much wealth as possible. The focus of the Distribution Phase is to successfully experience your ideal retirement. Managing income in retirement is more than just taking withdrawals from the assets earmarked for retirement. There are many risks and challenges that can create issues for your ideal retirement plan.

If you’ve read my book, watched a TV episode, or simply visited my website, you’ll discover that our experience is designed to help retirees successfully navigate the Distribution Phase of life. Being a Retirement Income Planner requires that I help my clients address their concerns, help fulfill their ideal plan, and also identify and mitigate any traps or challenges that may show up at any time in retirement. Here are some key points that we discuss with our clients to help them make a smooth transition from building wealth to creating a sustainable stream of retirement income.

 

1. Assess Your Current Financial Position

• Take inventory of all retirement accounts, savings, and investments.
• Identify guaranteed income sources (Social Security, pensions, annuities).
• Determine your estimated expenses in retirement, including essentials and discretionary spending. Be sure to include your desired budget for travel.

2. Understand Your Income Gap

• Compare your reliable income sources against your estimated expenses.
• If there’s a shortfall, determine how to fill that gap with your investments and savings.

 

3. Optimize Your Social Security Benefits

• Know your full retirement age (FRA) and how claiming early or delaying affects your benefits.
• Consider strategies like spousal benefits and survivor benefits.
• Work with a professional to optimize your Social Security strategy.

 

 

4. Create a Tax-Efficient Withdrawal Strategy

• Develop a plan for drawing income from tax-deferred (401(k), IRA), taxable (brokerage accounts), and tax-free (Roth IRA) sources.
• Be mindful of Required Minimum Distributions (RMDs) and how they impact your tax bracket.
• Consider Roth conversions to manage future tax liabilities.

 

5. Plan for Healthcare and Long-Term Care Costs

• Factor in Medicare costs and potential out-of-pocket healthcare expenses.
• Determine how to pay for long-term care expenses.
• Watch out for Medicare I.R.M.A.A. (Income Related Monthly Adjustment Amount).

 

6. Mitigate Market Risk and Sequence of Returns Risk

• Ensure that your portfolio is structured to withstand market volatility.
• The diversified portfolio you used to build wealth may not be ideal when you need to create income to fund your retirement. Diversification does not mean safety.
• Protect against the risk of withdrawing assets during a market downturn.

 

7. Align Investments with Your Retirement Goals

• Shift focus from building wealth to generating income.
• Reallocate your portfolio so that it is Balanced and designed to create income.
• Be sure to include a Volatility Buffer so you have options for taking income when markets are volatile.

 

8. Account for Inflation

• Your purchasing power will be reduced over the years in retirement.
• Ensure your income strategy includes growth potential to keep up with inflation.

 

9. Create a Legacy and Estate Plan

• Ensure your will, trusts, and beneficiary designations are up to date.
• Minimize estate taxes where possible.
• Have a plan for passing wealth to heirs or charitable organizations according to your wishes.

 

10. Work with a Retirement Income Specialist

• Retirement income planning is different from wealth accumulation.
• Partnering with a specialist ensures your strategy aligns with your goals, lifestyle, and risk tolerance.
• A customized income plan can provide clarity and confidence as you transition into retirement.

 

The shift from building wealth to creating a sustainable retirement income isn’t something to navigate alone. If you want to ensure your money works for you throughout retirement, let’s discuss how to put a plan in place that meets your needs and goals. Call my office at 309-291-0491 to schedule that conversation.

 

     To learn more about Tim and The Whisler Agency, go to www.thewhisleragency.com. To watch Tim’s weekly TV show “Income is the Outcome”, go to www.thewhisleragency.com/tv-series. You can reach Tim at (309) 291-0491 or by email at tim@thewhisleragency.com.

 

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC Registered Investment Advisor. The views, statements, and opinions expressed herein are those of the author, Tim Whisler, and not necessarily of Foundations or their affiliates. The content provided is for educational purposes only. No investment, legal, or tax advice is provided. A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies.