All month long, we’ve been exploring the three Is of financial planning: in case, income, and increase.
Today’s Renovating Retirement segment explores increase, or what it means to build wealth and create your retirement plan.
“Growing money is great, and you need to grow your money while you’re preparing for retirement,” said Charlie Jewett, Renovating Retirement. “In retirement, the most important thing is you’re ready for emergencies (i.e. in case), and you have a paycheck (income). You’ve got to have income coming in.
“If you have money leftover, let’s grow it,” Jewett continued. “You don’t know what medical expenses are coming down the road. You don’t know what inflation’s going to do, what taxes are going to do, when your kids are going to have a surprise, you know, a need for money.”
Jewett stresses that growing your nest egg needs to happen after you solve for your income.
“What we do not want, which is rampant in the industry, is a retiree trying to live off of a portfolio, taking income out of it,” he said. “There’s some really bad mathematical things that happen in that. You have to take a very small income and it’s very risky.”
Once you retire, your regular income goes away. It could be replaced by social security, rental properties, pensions, etc. If you don’t have a pension, you can purchase your own from an insurance company, which Jewett says could actually be better for you than a pension predetermined by an employer.
Jewett says growing your leftover money doesn’t necessarily mean putting it in the stock market.
“If more risk doesn’t equal more reward, let’s not take the risk,” he said.
Visit http://renovatemyplan.com to complete a financial plan blueprint and get more information.