Reaching Retirement Is Only The Beginning

You have achieved you goal of retirement. You have spent over four decades working and saving so you could relax and enjoy the activities in which you have an interest. Then, all of a sudden you realize that those activities you enjoy cost money. You might even worry as the reality of retirement sets in if you saved enough to afford the retirement you wanted. As I work with baby-boomers who are now achieving the goal of reaching retirement, one question keeps coming up.

Now that I am retired, what is the number one goal I should have for my investments?

Great question and believe it or not, I am a little more bullish in the early years of retirement than most. When my parents retired, my mother moved all of her pension buyout to an annuity. I am not a big fan of annuities and I certainly was not a big fan of the one she was talked into. Eventually she was able to access the money and redirect it to an IRA. Her money was tied up for ten years in that annuity and she only made a fraction of what she could have made had she initially put the pension in an IRA.

After pulling the money out of the annuity, I sat down with her and developed a double MRD strategy. MRD stands for Minimum Required Distributions and impacts traditional IRAs beginning at age 70 ½. The strategy is simple. Estimate the MRD on an annual basis and generate twice that amount in capital gains, dividends, and interest. The idea is to build enough capital in the account to cover the amount of the MRD twice, thereby growing the base and covering the payout.

Let’s say that you are required to withdraw $13,000 from your IRA. The strategy would generate growth of $26,000 between January and December. The best way to do this is to first defer any withdrawal until the second week in December. This allows the full value of your IRA to generate the $26,000 needed to achieve the goal. Next, you have to be slightly more aggressive in your investments than most financial planners would be, therefore you have to be open to actively participating in the process of investing. This strategy is not for everyone and if you have a financial planner, it is best to listen to his or her advice.

It is important to understand that I analyzed my mother’s current and future needs before I developed this strategy for her. I can say that her base investments have increased in value even though she has been taking MRD’s for many years. When she first retired, she still had a house payment and was driving an older car. Now her house is paid for and she is driving a newer car and is totally debt free.

Your situation will determine your strategy. I am just showing you how having a good strategy and being committed to that strategy will result in achieving your other goals. Each situation has its unique challenges and I would be remiss to suggest that retirement is a cookie cutter experience. You have to analyze the different dynamics, needs, and resources to determine which strategy will work. Employing the services of a strategic financial stability life coach can be the key to successfully navigating the retirement years.

I would also recommend my book, Simple Wealth Building Strategies, because even if you are in the retirement years, you still want to set meaningful goals and my chapter on goals will help tremendously. If it is a goal to leave a legacy for your grandchildren, you are never too old to learn ways to increase your contribution to their success. This is also a great book to give as a gift to your children and grandchildren. The information contained within the book will assist them in becoming smart money managers. Some people pass on only money, but why not pass on financial resources and the knowledge required to manage those resources successfully?

The number one goal to have in retirement concerning your investments is to actually have a goal. Think of it this way. Have a goal to have a goal and then consider talking to a financial stability life coach. I offer a free, no obligations, skype session for financial stability coaching. Those who visit my website and complete the contact form should type “Skyping with Ken” in the subject line and request a free session in the body of the message. Be sure to identify the specific question you have so we can discuss how you can achieve your goals. Skype sessions are based on a first come, first serve basis and is restricted to schedule availability.