We all have our own retirement dreams…
That idyllic stage of our lives when you can do the things you want…
As long as your income supports it.
But what happens if you outlive your wealth?
For many years, advisers have spoken about the ‘4% rule’.
Essentially, it’s the idea retirees can safely withdraw 4% of their portfolio each year as an income…
But it’s not that simple when you account for inflation.
Or tax.
Another rule of thumb is “Your Age in Bonds”.
As a 50-year-old, for example, you should have 50% of your portfolio in bonds.
At 75, your asset allocation should be 75:25 (to stocks).
But both rules are not sufficient on their own.
Watch the video to understand why.
Risk is inevitable when it comes to investing...
But managing it is important at every stage of your life, especially at retirement.
With people around the world living longer, the risk of running out of money is becoming a common reality.
Here's a quick case study on a client named Michael...
He's a senior international professional living in the UAE with an annual income of £250,000 and assets worth £1.97 million in total.
Michael and his wife wanted to receive an income of £135,000 per annum during retirement, which was merely 9 years away.
He came to us for a second opinion review.
After understanding his financial situation, we pointed out that he was not going to reach his retirement goals...
The cash flow model we created for him accounted for inflation at 3% per annum...
An expected increase in education costs for his children at 6% per annum...
And the fact that most of his assets were in the bank with rates much lower than inflation.
The model revealed his wealth would not outlive him.
On the contrary...
There's a possibility his family would be left in debt.
However, there was still an opportunity to help him get back on track...
We were able to restructure his wealth in 3 easy steps by:
1. Diversifying his investments based on his tolerance to risk.
2. Helping him find a low-interest mortgage so he could purchase a family home.
3. Structuring his assets to minimise the taxes he was liable for on his properties in the UK.
This left Michael in better control of his financial future...
Giving him confidence that his wealth would outlive him and be passed on to his children.
Give yourself the life you deserve
Financial planning rules of thumb and ideas are good ways to build investment habits.
But it’s their application to your individual (and constantly changing) circumstances which is critical to your success.
Try not to leave it too late or make many mistakes.
There are 3 simple steps to get the relief, confidence, self-assurance and empowerment you need to feel good about your wealth and future.
Contact us to find out what they are, and how you can start applying them today.
