BERLIN – Traditional strategies for maintaining income and hedging against inflation might have been appropriate for the typical retirement of the World War II generation, but they just won’t cut it in the current environment. One reason is that we’re living longer — what was, not so long ago, a 15-year plan now needs to be adjusted for a life expectancy that can be 20 or 25 years, or even longer.
On the whole we’re healthier, too, and more interested in remaining active and productive. Because many people are choosing to mix a more relaxed work schedule with leisure in these post-career years, their income streams become that much more complex. In other words, managing income in retirement is no longer cut-and-dried — it’s a moving target.
To keep your eye on that target, you need to be able to answer a number of questions: How do you know which assets to tap into, and how much to take in order to meet both your day-to-day expenses and your long-range objectives? How much can you afford to spend? How has your tax status changed? How can you sustain the lifestyle you want without outlasting your savings?
As Stephen Mitchell, Director of Education and Planning in the Merrill Lynch Retirement Planning Group, sees it, there are two main elements to a comfortable retirement. The first is ensuring sufficient income. The second is managing it properly.
“Today’s retirees depend on income from a variety of sources,” Mitchell said. “You need to create a strategy that helps you manage multiple sources of income, a variety of investment accounts and complex tax issues that require expertise and sophisticated tools.”
That strategy should also be flexible enough to help you deal with the unknowns that can complicate retirement planning. Just ask David Witt. A few months before he retired at age 54 from his job with IBM, Witt fell outside his North Carolina house and broke his wrist. It was doubly difficult for Witt, a church organist who had planned to pursue his dream of composing music in retirement. Several months later, his daughter announced that she was getting married — wonderful news, but an event that carried the potential for a significant expense. That fall, a hurricane blew several trees down on his house.
What helped put Witt and his wife, Pat, back in control of their finances — both short- and long-term — was the Merrill Lynch Retirement Income Service® (RIS).
The Merrill Lynch Retirement Income Service combines income, investment and portfolio strategies to help you meet both your long-term retirement objectives and your daily cash-flow needs. The service offers:
- A Long-term Strategy: It helps you determine your retirement goals and how much income you’ll need to achieve them.
- Personalized Investment Solutions: Investment and portfolio management guidance is tailored to your needs and circumstances, and aligned with your goals.
- Annual Income Planning: The service can estimate the income you’ll need, which assets to tap first and the withdrawal rate that will help your assets last through your retirement.
- Cash Management: It also offers simplified management of multiple income sources, easy access to cash and convenient expense management features.
- Progress Monitoring: You can use the service to stay on track to meet your retirement income goals and to make any necessary changes.
Armed with this service and the experience of a Financial Advisor, making a smooth transition into this exciting new phase of your life can be easier.
(The writer is a Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-9084.)