Our Retirement Planning Strategy Explained
There are many different financial advisors out there. At 80/20 Financial Services we specialize in retirement income and investment planning. And we specifically specialize in helping electric cooperative employees create investment plans to ensure they don't run out of money in retirement.
Just as you wouldn't go to your family doctor for heart surgery, you wouldn't want to go to a financial advisor that doesn't specialize in retirement planning if retirement planning is what you need.
Our strategy is fairly simple, however don't confuse simple with easy. It may be simple to set up initially and simple to explain, but it is not simple to implement in an ongoing basis.
As an advisor 20% of my fee is earned from creating and implementing the plan and 80% of my fee is earned by KEEPIN YOU ON THE PLAN throughout the 20-30 years of your retirement.
Our strategy is not a one-time plan and we are done for the next 20-30 years. It's a fluid and adaptive strategy that changes with you and your needs. Your needs will change over time and so will your retirement plan. We will meet a minimum of once per year to update your plan.
The main problem we help you solve is this:
How can we ensure the money you need today and in the near term is safe and predictable and not subject to temporary market fluctuations, while at the same time putting you in a position to receive the permanent market returns which are necessary to provide an income that increases and outpaces inflation?
We help you accomplish this with a 4 Portfolio Strategy. I often joke that my retirement planning strategy can be compared to the infamous mullet haircut. Business in the front and party in the back!
Portfolio #1 is built and designed to provide you with a dependable and predictable income for years 1-5 in retirement. (It will contain cash and/or cash equivalents such as Money Market Funds or similar no risk options)
Portfolio #2 is built and designed to provide you with a dependable and predictable income for years 6-10 in retirement. Since you have the first five years of income taken care of, we can now choose investments that are designed to grow for five years and then provide income for years 6-10 in retirement. (It will contain cash, bonds, bond equivalents, guaranteed annuities or similar low to no risk options)
*In years 1-10 of retirement our goal is predictable income. We aren't concerned with growth here. This is all business.
Portfolio #3 is built and designed to outpace inflation. You have approx. a 10 year period for the investments to grow before you need the money for income. Therefore, we select investments that allow you to maximize your returns over a 10 year time frame. This money is designated for years 11-15 in retirement. (It will contain low-cost value oriented Mutual Funds containing the best companies in the United States and internationally.)
Portfolio #4 is built and designed to outpace inflation. It works the same way as Portfolio #3 but you have 15 years or more to let it grow. This gives us the necessary time to withstand the fluctuations of more aggressive investments. This money is designated for retirement years 16 and up in retirement. (It will contain low-cost growth oriented Mutual Funds containing the best companies in the United States and internationally.)
*In years 11-30 of retirement our goal is creating income that has outpaced inflation. These are the "party" portfolios. They will move up and down and up and down continuously by design. As they grow, we use these portfolios to replenish portfolios 1 and 2.
Portfolios 3 and 4 will be volatile at times but don't confuse volatility with risk!
Volatility is the up and down movement of company (stock) prices around an increasing trendline over time.
Risk is the chance of you permanently losing your money.
We will expose your long-term money to volatility because that is the only way to beat inflation long-term. However, we will not put you in a position to permanently lose your money ever.
Our goal for you
Our goal with this strategy is to help you avoid two of the most common problems a retiree faces in retirement.
1.) Spending too much and running out of money and purchasing power
2.) Spending too little and not taking advantage of the goals you had for your money
Our strategy is long term and not affected by day-to-day fluctuations of the stock market. Our retirement plans are designed with one thing in mind and that is to keep you as worry free as possible so that you can enjoy this time in your life that you have earned and deserve.
Very important:
What we CAN do for you:
• We can help you identify your retirement goals, create a plan to achieve those goals and build a portfolio to accomplish our plan.
• We can help you stick to your plan through all the stresses and strains of a 20–30-year retirement while updating your plan yearly as your life changes.
What we CAN’T do for you:
• We cannot forecast the economy over the next year or the next. No one can.
• We cannot forecast markets or time markets. No one can.
• We cannot predict which investments will outperform other investments on a yearly basis. No one can.
Goals, plan, portfolio
So once again our process is to identify your retirement goals, establish an income and investment plan to achieve them and then, and only then, we create a portfolio to carry out our plan. Goals, plan, portfolio... always in that order.
I hope you can clearly see the wisdom of our strategy. If you are nearing retirement or in retirement and would like help with your retirement planning we would look forward to visiting with you. You can see our entire process here.
There is no hard sell and nothing to buy. You have our word on that.
You need a plan
A goal of retiring - without a plan - is simply a plan to run out of money. At 80/20 Financial Services we work to insure the money you need in the early years of retirement is safe and not subject to temporary market fluctuations, while at the same time putting the money you'll need in the later years of retirement in a position to receive the long term market returns necessary to provide an income that increases and outpaces inflation.
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Brian Coleman-Owner/Advisor
80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). We work with clients in Missouri and throughout the United States. Being independent allows us to work exclusively for YOU.
We specialize in helping electric cooperative employees create their retirement income and investment plans. Retirement can last 20-30 years. You need a plan!
Photo by Maarten van den Heuvel on Unsplash
