How To Structure Your Money Properly In Retirement - Retirement Dream Maker

How To Structure Your Money Properly In Retirement

There are many questions about how to structure a solid retirement plan that helps individuals easily understand how their money will work for them in retirement, and how their money will accomplish the goals of how to use their money to accomplish certain goals. I’ve used a simple method in my private practice to help clients easily understand how their retirement money works harmoniously and powerfully together.

Let’s review a powerful way to think of your retirement assets in terms of how you use them to your advantage. Over the years, I have seen the value in thinking of your retirement in terms of pools of money.

In my practice, I believe people should have three types of money.

1) Immediate money – The money you need readily available to you at a moments notice. This is the money you might have in your checking or savings account. This is the money you would use in case your water heater goes out, you have a car accident, a medical situation, or money to travel. The amount of money you allocate to this category is totally individual and based upon what you feel comfortable having available at a moments notice. It can range from a few thousand dollars to hundreds of thousands of dollars.

2) Income producing money – The amount of money you need to produce a guaranteed income in retirement. The days of the corporate pension are going away and more and more people are responsible to create their own personal pension. This is typically the bulk of an individual’s savings.

3) Legacy money – You can think of this as “do not need now money”. This is money that may be earmarked for major medical events in retirement or money that would be left to family, religious organization or any charity. Some individuals have no desire or ability to have Legacy money and some individuals have a great ability and desire to designate money to this category.

If you do have assets allocated as legacy money, I recommend finding ways you can increase the value of these assets by decreasing or erasing tax-liabilities to heirs and multiplying its value, should you ever need long-term health care and when you pass.

Thinking of your money in these terms can help solidify the amounts of assets you allocate for each specific purpose. It will also help you decide what types of solutions will help you best accomplish these goals and how much money you need to have allocated in “Risked Money Strategies” and “Safe Money Strategies” to ensure a safe and secure retirement. The ultimate goal, for you, is to give yourself the ability to follow your passions in retirement with confidence, free of financial uncertainty and anxiety.

I know from experience, the only way a person can have the permission to create a fulfilling retirement, full of personal growth and new challenges, is by creating safety and security in the retirement plan. From my experience having enough immediate money available, income-producing money put to proper use and being able to multiply legacy money in retirement mentally gives retirees’ permission to pursue their real passions. This is my hope for you too!


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