Q. I read on your website that there are 3 Phases of Retirement Income Management.
What is that all about?
A. I have broken down the retirement planning money cycle for you. It is easier to understand when
you see it as separate stages of planning your retirement money.
Q. What are the 3 Phases of Retirement Income Management?
A. The 3 Phases of Retirement Income Management represent the 3 stages of building, protecting and
spending your retirement money. Each of the 3 Phases addresses specific considerations on how to plan
your money for a successful retirement. They are: Accumulation Phase - Preservation Phase - Distribution
Q. What is the Accumulation Phase of Retirement Income Management?
A. This is the time of saving and investing money which you have specifically reserved for
retirement. This is not to be confused with creating a traditional savings account. Accumulating
money for retirement is most often done by making contributions to: 401k, 403b, IRA, ROTH IRA,
CDs, real-estate for investment purposes, cash value life insurance, annuities or investing in stocks
and bonds or mutual funds directly.
Q. What is important about the Accumulation Phase?
A. The growing of your money little by little, year after year is the key to successful accumulation.
During the Accumulation Phase you are focused solely on building your assets. Keep in mind
that during retirement your ability to pay your bills to maintain a comfortable lifestyle will depend
on the money you saved and the growth of the investments you made during the Accumulation
Q. When do I stop the Accumulation Phase?
A. Some accumulation, in the form interest, dividends or growth of your portfolio must continue
throughout retirement. Usually, the investment products used to continue the growth of your money
during retirement are different from the investment products you used during the building of your
Q. What is the Preservation Phase of Retirement Income Management?
A. The Preservation Phase is the time to pause and examine your accumulated assets and review your
risk return profile. Ideally the Preservation Phase starts approximately 5 to 8 years prior to actual
retirement. This is the time to take inventory of your life and evaluate how your plans for retirement
are shaping up. Ask yourself the following questions: How is my money invested? Are my investments
allocated appropriately as I move towards retirement? What is my current risk return profile? Do I
need to make a change in how my assets are allocated? What will my retirement income
requirements be? When will I start claiming my Social Security benefit and how much will I receive?
Q. What is important about the Preservation Phase?
A. Appropriate planning of the Preservation Phase can make or break a successful retirement. It is
during this phase that a review of your entire investment portfolio should be completed and
evaluated along with your refined, retirement risk profile. This is also the time to take a detailed look
at your exact cost of living and calculate your Social Security benefits and any potential pension
benefits to see what your additional retirement income requirements will be. It is also important
explore how you plan on spending your time during retirement.
An important aspect of the Preservation Phase, which is often overlooked, is the need for the
continuation of accumulation through appropriate investment products that meet your new
retirement risk return profile. In most cases adding money to your retirement nest egg during
retirement will come only from the returns, dividends or growth of your investments.
Q. What is the Distribution Phase of Retirement Income Management?
A. The Distribution Phase is when you begin to receive systematic monthly income from your
Q. What is important about the Distribution Phase?
A. Not outliving your money! All your planning and the creating of a solid retirement income plan
are done for the sole purpose of NOT running out of money during your lifetime.
Q. How do I start a retirement plan?
A. Set a date. Determine when you want to begin retirement.
Q. What if I’m not sure EXACTLY when I will be able to retire?
A. Don’t wait. You can always adjust your plan once it is set up: itemize your living expenses,
check your Social Security benefit options, think through the best time for you to begin collecting and
continue to monitor your investments, review your possible need for long term care and continue to
add to your emergency fund. When you get close to knowing exactly when you will be ready to start
your retirement you will be ready. Here is an article that will be helpful for you on this topic:
Q. Once I know my retirement date, what’s next?
A. Take a look at your Social Security benefits statement and check your account with Social Security
online at www.ssa.gov to identify what amount of monthly income you will be receiving. Be sure you
have itemized your monthly living expenses so you are aware of what amount of additional monthly
income you will need to supplement your monthly Social Security benefit to meet your expenses.
Q. I went to the Social Security office in my community and they gave me different answers to my
benefit questions than the information on my benefit statement. Who is right?
A. Social Security is a complicated subject. It is always a good idea to check and recheck what your
benefit options are. A mistake could cost you thousands of dollars a year. Your benefit, once chosen
and started, cannot be changed. With that said, I recommend that you visit Social Security Choices
online at www.socialsecuritychoices.com, they offer a customized report for $39.99.
Q. My wife and I are confused on how to plan for our Social Security benefits. We are concerned
that we may make a mistake. What is the best way for a husband and wife to collect Social
A. Once again, I recommend that you visit Social Security Choices, online and pay the $39.99 for a
customized report. According to Dr. Jeff Miller, co-founder of Social Security Choices, there are as
many as 600 benefit options for married couples.
Q. We just came back from a Social Security seminar and the person teaching the seminar wants to
come to our home and speak to us about Social Security. Can he help us get a higher benefit?
A. Well, I cannot speak for the skills and the knowledge of people offering this information but I can
tell you that your Social Security benefit calculation has nothing to do with someone who is teaching
a seminar. Social Security seminars are usually done by investment advisors or insurance agents.
Please see my recommendations on how to get the best benefit you are entitled to in Q & A #13 and
Q. Do you think we can count on Social Security to be there for us?
A. Yes, I do. Do I think there may be some changes made in how benefits are received for younger
generations? Probably. That is why educating your children and grandchild on the need to begin
saving early on for their retirement is so important. There are some excellent and simple tools under
Free Stuff here, on this website, which will be helpful to those during their peak earning years. My
favorite handout is: You Will Earn A Fortune, you will find it there.
Q. I have always done my own investing. Should I continue to do my own retirement planning?
Planning for retirement is very different from accumulating investment assets, generated
over your lifetime. With that said, I recommend that you NOT go through the retirement planning
process alone. Here are a few reasons why:
1.) There are many nuances that may apply to your unique situation that can be easily
overlooked if you are not aware of what to look for.
2.) Often the investment and insurance products needed to structure a well-funded retirement
plan are not available directly to the consumer.
3.) Planning retirement can be an emotional and stressful process.
Procuring the help of an experienced investment advisor, specializing in retirement planning, will be
helpful in identifying common planning oversights. In addition, the advisor will have access to
planning products that will be required for you to meet your retirement income goals. And finally
and most importantly, it will most likely reduce the stress of actually creating your plan alone.
Q. I don’t think I have enough money to actually retire. Now what?
A. You may need to continue to work or possibly reduce your lifestyle. For some, retirement may
bring the opportunity to explore new avenues to generate income, such as consulting work in a
related field or through a hobby that has income-generating potential. Keep in mind, at some point,
your ability to generate earned income will begin to diminish or end entirely so it is important that
you confront the issue of adjusting your lifestyle to match the limitations of your income.
Q. How do I know if the mutual funds, annuities, stocks, bonds, CDs and real-estate I have used to
accumulate my net worth and build my retirement investment portfolio are still appropriate once
I actually retire?
A. You will need to do your homework here. The first step would be to determine whether the
investments you currently have meet your current pre-retirement/retirement risk return profile. It is
important to remember that past performance does not guarantee future returns when evaluating
Q. Should I take my money out of my 401k as a lump sum distribution?
A. Generally speaking no. The answer to this question is dependent on your age and what you
plan on using the money for. There are many options available to you that would preserve the tax
status on the account and still provide you use of your money when you need it. Please consult a
qualified investment advisor to help with this decision.
Q. Should I keep my 401k money with my employer plan after I retire from my company?
A. Usually you will have more investment options if you roll your 401k balance over to an IRA or
a series of IRAs outside your former employer sponsored plan. Please remember if your
former employer were to go under (think Enron, Lehman Brothers, etc.) it can be a
painstaking task to try and get access to YOUR money when you need it the most.
Q. Is rolling over all my 401k money to an IRA or series of IRAs a good idea?
A. The rollover strategy often provides more investment diversity and control over your money
with less cost to you.
Q. If I know I need to restructure my investments for retirement, when is the best time to do it?
A. First, a clear understanding of your present risk return profile as well as a complete evaluation of
the investments in question, to assess their current suitability, will serve as guidelines in determining
if and when you will make your investment portfolio adjustments. Second, ask yourself these
questions: What is my time horizon until I begin retirement? Would a severe downturn in the
market affect my income needs to the point that it could keep me from maintaining my current
Q. What is a “conservative” investment portfolio?
A. A more conservative investment portfolio is one that is characterized by investment products and
investment strategies that have a lower risk of loss of principal. CDs and insurance products such
as cash value life insurance and annuities would be classified as conservative.
Q. Should I move my money to bonds when I retire?
A. Diversification in your investment portfolio is important.
I do not recommend that all your retirement money be placed in any one investment option.
Q. Should I place my IRA money in a bank CD?
A. Certificates of Deposit may be a helpful holding instrument for some of your money if you
are fearful of investments. However, be mindful of the bank’s limits to secure the safe return of your
money as well as potential penalties for early withdrawal. In today’s financial environment it is
always a good idea to request to see the fine print that outlines what the bank has verbally told you.
Q. What is “Life Planning” and how does it relate to retirement income planning?
A. Life Planning is often done prior to starting the retirement planning process. It is all about how
you want to live and how you will spend your time and how much money will be required to support your plans.
Q. Are there financial products that will guarantee the return of my principal invested?
A. Yes, there are specific insurance products that offer this feature.
Researching this product category is like entering a maze. Do yourself a favor and seek the counsel of a
qualified and competent investment advisor who is well experienced in the placement of annuities in a retirement plan.
Q. Should I consider getting my annuity from the bank?
A. Banks offer a limited selection of insurance products. Most of the time the person in the
bank presenting the annuity has limited experience and knowledge. There are many excellent
investment advisors and retirement planners, who are licensed and well trained in the nuances of
annuity contracts and how they might fit into your retirement plan, there really is no reason to
purchase an annuity from a bank. But most importantly, annuities should be placed in a portfolio
when needed not sold as a replacement for another financial vehicle.
Q. Are annuities a good idea to add to a retirement plan?
A. Annuities are designed to support the Preservation and Distribution Phases of a retirement
portfolio and historically are used for income planning. The rule of thumb is this: If you do not
have time to earn back a potential loss of principal, it only makes sense that you would consider
having some percentage of your retirement portfolio protected in a way that can provide income
Q. Are there many different kinds of annuities?
A. Yes! There are hundreds of different annuity contracts available and they can be very
Q. I have heard about managed portfolios, are they a good idea to use in a retirement plan?
A. Professionally managed portfolios can be an excellent funding option for a retirement plan.
Once you have been introduced to a particular type of managed portfolio check out the details
of the portfolio manager and the strategy that is used. That information will be helpful for you in
making an educated decision whether the product is right for you.
Q. I have always enjoyed trading stocks. Since I am retired now and have the time I would like to
trade our retirement account but my wife said no, it’s too risky. What do you think?
A. I am inclined to agree with your wife. I think carving out a portion of your retirement account
to “see what you can do with it” might be fun for you.
Q. I keep hearing about the need to have a substantial cash emergency fund during retirement.
What amount of money do you recommend for this?
A. It depends on your resources and your lifestyle as well as your health and possible special needs.
Speaking in general terms, I suggest that you calculate the deductibles and co-payments of
all your insurances and add to that the cost of any housing maintenance problems that could occur.
Some folks feel that one to three years income on hand is appropriate. This is money you simply
hold in a cash reserve in the event of an emergency.
Q. I have always handled our family investments but now that we are retiring I am concerned
about my wife; she is unaware of how the investments work and she has no interest in getting
involved now. Do you have any suggestions on what to do?
This is quite common for couples who have been in a traditional relationship, where the
husband handles the money and the wife takes care of the children and the home. Here are some
suggestions you may find helpful:
• Get the help of an advisor. Include your wife in the interviewing process. Explain to her
that you are seeking the help of someone she likes in the event that she outlives you. Allow
her to have a strong voice in that decision.
• Once chosen, give the advisor a call prior to your first planning meeting and ask the advisor
to speak in terms that your wife will understand. Let the advisor know that your wife was
instrumental in making the decision and this is a process of education for her.
• Your wife needs to feel safe and comfortable with the advisor. This takes time and requires
Q. I retire in 3 years. I think we have saved enough money. Can I wait until the year I am going to
retire to start our retirement plan?
A. No. Create your plan now. The biggest problem with your statement are the words “I think”
regarding the amount of money you have saved. By starting your retirement planning process now
and working through the numbers and thinking through the idea or retirement you will be well
aware of whether you will have enough principal to provide you with a life income. Also you will
have the next 3 years to add to your retirement and your cash emergency fund if need be.
Q. I have had my own business for 30 years and make a very good income. I do not plan on
retiring. I will apply for my Social Security benefit when I’m 70 but I want to continue to work until
I am well into my 80s. My family keeps telling me I still need to plan. What do you think?
A. Of course you need a plan. It’s wonderful that you are so independent
and enjoy your work. Well done for creating that! A retirement plan is not just for the usual and customary form
of retirement but it will also serve as a solution to any major health issues that may occur down the road if you
were unable to work and HAD to take a full retirement. You may live to be 75 or 85 or 95 and beyond and having a
plan will definitely help you be prepared for whatever life brings your way.
Q. Do you recommend Long Term Care insurance?
A. Long Term Care insurance can be a powerful planning tool used to help defuse
the high cost of daily assisted care that is required as a result of a serious health issue. Seek a Long Term Care
specialist to discuss your possible need for LTC and determine if this is an appropriate purchase to add to your
Q. I have done some research on Long Term Care insurance and it seems expensive. How do I know
if it is worth the money I will spend on the premiums?
A. The cost of Long Term Care insurance is calculated using many factors. A Long Term
Care specialist will address your questions and concerns and help you analyze the costs and the details of the coverage
which may be right for you. Once you have this information you can decide whether the purchase of LTC makes sense.
Q. My wife and I are considering the possible purchase of Long Term Care insurance. Do any of the
Long Term Care insurance products cover assistance of care if we choose to stay in our home rather than go to a residential
assisted living facility?
A. Yes. There are LTC products on the market that offer in-home care, but not all do.
It is important is that you understand the exact details of the insurance contract you are applying for BEFORE you make
Q. My wife and I had our estate plan done 5 years ago. My son has been pushing me to get a second
opinion to be sure everything is in order. Do you think this is necessary since we already have an estate plan and our trusts
were put in place 5 years ago?
A. Annual estate plan reviews are important since there may have been changes in the tax
law, that you are unaware of, or changes in your circumstances or assets, which you have not considered, that may affect your
estate plan. You might choose to get a second opinion from another attorney or go back to your original attorney. I would be
inclined to agree with your son and get a second opinion since you have not been contacted by the originating attorney for the
all-important annual review.