In this episode of the Power of Zero Show David McKnight gives you a blueprint with the key steps to follow for a successful and stress-free retirement if you’re about five years away.
The first step is figuring out your retirement income shortfall, the income you’ll need every month in retirement, as well as how much of that will be covered by sources like Social Security and pensions.
The retirement income shortfall represents the amount of income your retirement assets need to produce in order to fund your lifestyle.
One strategy many retirees rely on is taking a portion of their liquid retirement savings, often from a traditional IRA or 401(k), and rolling it into an annuity designed to produce inflation-adjusted lifetime income.
The second pillar of the blueprint discussed by David are investments: Roughly 70% to a total U.S. stock market index fund, and 30% to a total international stock market index fund.
While things like paying the electric bill or putting food on the table are covered by your guaranteed income sources, this portfolio is designed to fund discretionary expenses (e.g. taking the grandkids to Disneyland, traveling, etc.) and unexpected shock expenses.
David emphasizes that, by investing this discretionary bucket entirely in stocks rather than bonds, you increase the likelihood that the portfolio will last through your actuarial life expectancy.
“When properly structured and funded, an index universal life policy or IUL can serve as a volatility buffer within your retirement plan”, says David.
Furthermore, a IUL policy can also provide a death benefit that can be accessed in advance of your death for the purpose of paying for long-term care…
Remember: Retirement planning isn’t about guessing what the market will do, it’s about building a system where your basic needs are guaranteed, your growth assets continue compounding and you have the tools in place to manage volatility and unexpected risks.
Mentioned in this episode:
David’s new book, available now for pre-order: The Secret Order of Millionaires
David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David’s Tax-free Tool Kit at taxfreetoolkit.com
