Income-Based Financial Strategies
Research consistently shows that the No. 1 fear of older Americans is that they will run out of money before they die. Why? Because it happens, and it happens because most Americans still don’t know how to properly prepare financially for retirement. It isn’t really their fault, though, because most financial advisors continue to push the idea that you need to save a huge amount of money and then create a withdrawal plan to generate retirement income. That’s wrong. Withdrawal plans are flawed because their success depends on market growth, which is a huge unknown. The market may grow most years, but it may also shrink, which means you won’t be withdrawing from gains in those years, you’ll be spending down your principal. The more you do that, the more you run the risk of facing your biggest fear: running out of money.
But we believe there is a safer, better option: Invest for income instead of growth. Although most investors have been led to believe “growth” and “return” mean the same thing, it isn’t true. Total return is really a sum of two things: income and growth, as shown in the formula: TR=I+G. While growth is measured in capital appreciation, income is generated through interest and dividends.
And, in our experience, the only truly “safe” way to ensure you won’t outlive your money is to have a strategy that generates reliable income through interest and dividends. Why? Because:
- When you live off your interest and dividends, you’re not spending any principal, so you don’t have to worry about whether the market grows or shrinks.
- You have the potential to keep growing your money more safely through strategic reinvestment.
- It makes your retirement income a “renewable resource”.
At Rothermel Financial Services, we specialize in helping you eliminate your fears by showing you how to prepare for retirement The Right Way! We have the knowledge, experience, and resources to help you design a customized, diversified, actively managed portfolio of interest and dividend-generating instruments suited to your individual goals, needs, and risk tolerance.
Give our office a call today to find out if an investing for income strategy is right for you.