There are three phases to our wealth and how it’s managed: Accumulation, Preservation, and Distribution. If properly managed and planned for, these three phases can guarantee that you have a safe and profitable retirement while providing the legacy you dream of to your children or beneficiaries.
The first phase, accumulation is where we spend most of our lives. This should be and usually is during our working years and drives us to work harder and hopefully start saving. There are some scary figures out there saying that a large number of the work force is living pay check to pay check and with today’s employers providing less and less retirement benefits such as pensions or 401k’s it has become even more crucial for us to find other ways to start a plan.
The second phase, preservation is about moving your assets to low or no risk accounts in order to protect what you’ve spent most of your life accumulating and limit the risk of loss. Unfortunately many people wait until it’s too late to realize that perhaps those risky investments were not the gold mines they thought they were. The preservation phase does not mean that we have to eliminate the potential for growth but it should however greatly reduce if not eliminate any potential for catastrophic losses. Many advisers say that investments always come back if you’re patient enough to wait but most of us don’t have an extra 10-15 years to spare just to make our money back. Those who had expectations of retiring could now have to work an additional 5-10 years or even until they die just to be able to pay the bills.
The final phase, distribution can take place at retirement or upon your death. If you want to start enjoying your ‘golden years’ and draw money out of your accounts that you’ve accumulated over your lifetime, it is important to get with a professional to understand how to provide a lifetime income can that will allow you to maintain your lifestyle without worrying about running out of money. The other distribution method is when you die. How will your assets be passed on to your beneficiaries and what it will be used for.
We don’t need to have these figured out right away but it is undeniably important to at least understand what you need to be planning for. Brainstorming with a trusted retirement specialist from the day you get your first job to the day you die will ensure that you protect yourself and your family against the unexpected.