Income and LTC

Forbes published an article on April 16, 2019 that shared “Comparing The 3 Most Popular Retirement Income Strategies”.  According to the article, there are three common approaches:

Systematic Withdrawal Strategy

Using this strategy, if you had $1,000,000, you could withdraw roughly 4% ($40,000) per year adjusted for inflation and would not run out of money.  This premise is based upon historical US returns and a 50/50 stock/bond portfolio mix.

Flooring Retirement Income Strategy

Simply, this approach prioritizes spending goals between “wants” and “needs” where sources funding the “needs” is derived from secure income sources while the “wants” are tied to more “risky” sources.  This strategy usually includes the use of lifetime income instruments such as annuities.

Time Segmentation “Bucket” Strategy

Basically, buckets of resources are set up to align with the timing of events and income requirements with the underlying capital will be set aside in a variety of investment vehicles that align with a timeline.  The basic timeline is short-term, mid-term, and long-term (over 10 years).

One thing that each of these strategies addresses is that they provide a baseline strategy for retirement income planning.  As the author notes, “each strategy has its share of strengths so it doesn’t have to be an all or nothing approach – combining aspects of all three could be quite beneficial.”

Why would someone work to accumulate assets and implement a retirement income strategy and not protect that income producing capital from a forced and unplanned liquidation? 

Too often, retirement income plans are destroyed by neglecting to plan for the most costly expense that someone could incur during retirement – an extended healthcare event.

By simply allocating a portion of the retirement funding plan to include an asset-based long term care product such as Asset Care or Annuity Care, some (if not all) of the income producing assets can be shielded.

Asset-based LTC is designed to protect income.

Protect the income!