Bill Wilson discusses how to create a sustainable income
Listen to the interview on the Business Innovators Radio Network: https://businessinnovatorsradio.com/interview-with-bill-wilson-president-of-wilson-financial-group-discussing-how-to-create-sustainable-income/
Retirement is often viewed as the pinnacle of one’s career journey—a time to relax, travel, and enjoy the fruits of years of hard work. However, the transition from accumulating wealth to drawing down that wealth can be fraught with challenges. As Bill Wilson, president of Wilson Financial Group, emphasizes in a recent podcast episode, the key to a successful retirement lies not just in reaching the summit of retirement age but in effectively managing income throughout the retirement years.
At the heart of a successful retirement plan is the concept of sustainable income. Sustainable income is the amount of money you can withdraw from your retirement savings each year without depleting your resources prematurely. It is essential to distinguish between “have-tos” and “want-tos.” The former includes fixed expenses such as housing, food, utilities, insurance, and healthcare—expenses that must be met regardless of market conditions. The latter encompasses discretionary spending, such as travel and leisure activities, which can be adjusted based on available resources.
To create a reliable income stream, retirees must focus on building a “lifetime income floor.” This floor is typically composed of guaranteed income sources such as Social Security, pensions, and lifetime annuities. These sources provide a safety net that covers essential expenses, allowing retirees to enjoy their desired lifestyle without the constant worry of financial instability.
One of the significant risks in retirement planning is longevity risk—the possibility of outliving one’s savings. As people live longer, it becomes increasingly important to plan for income that lasts throughout their retirement years. Strategies such as longevity insurance, including Qualified Longevity Annuity Contracts (QLACs) and deferred income annuities, can provide additional layers of financial security. These products allow retirees to defer income until later in life, thereby protecting against the risk of running out of money in advanced age.
Another effective strategy for managing retirement income is layering. Instead of locking in all retirement savings into a single income stream at once, retirees can benefit from a staggered approach. This involves creating multiple income sources that can be tapped at different stages of retirement. For example, retirees can combine early income from investments with later income from annuities, allowing for adjustments based on market conditions and personal needs.
Flexibility is crucial in retirement income planning. The traditional 4% withdrawal rule, which suggests retirees can safely withdraw 4% of their portfolio annually, may not hold up in today’s volatile market. Instead, applying a flexible draw strategy—where retirees adjust their withdrawals based on market performance and personal circumstances—can help preserve capital and ensure that income lasts longer. This may involve reducing spending in years of poor market performance or withdrawing from cash reserves or bonds during downturns.
Inflation is another critical factor that can erode purchasing power over time. To combat this, retirees should maintain some exposure to growth-oriented investments, such as equities, which can provide returns that outpace inflation. Additionally, Social Security benefits often include cost-of-living adjustments (COLAs), which help keep pace with rising costs. Retirees can also consider income annuities that allow for increases over time or delay the start of income payments to enhance future cash flow.
The journey through retirement is akin to descending from Mount Everest. While reaching the summit is a significant achievement, the real challenge lies in navigating the descent safely and effectively. A well-structured retirement income plan is essential for overcoming the various challenges that retirees face, including taxes, inflation, and health care costs. By focusing on sustainable income, utilizing longevity insurance, layering income sources, and maintaining flexibility, retirees can create a financial strategy that not only supports their lifestyle but also provides peace of mind throughout their retirement years.
In summary, planning for income throughout retirement requires a comprehensive and proactive approach. By addressing potential risks and creating a diversified income strategy, individuals can ensure that their retirement is not only enjoyable but also financially secure.
Bill shared: “my model, my company is I help people get to retirement, but through retirement. And so, income is lifestyle and incomes, everything. And, I share with people that, when it comes to retirement income that you truly cannot live you’ve got to focus on longevity.”
About Bill Wilson
Wilson Financial Group focuses on helping people keep what they work hard for when it comes to their retirement. It’s about how people get from where you are right now to where they want to be. It is about achieving their personal financial goals and enabling them to enjoy the fruits of their labors without having to worry if tomorrow will be a good or bad day in the markets. It is important to plot their path, have a plan for how to get there and get the right advice along the way. “We Help Clients Get to Retirement and Through Retirement.”
Learn More: https://wilsonfinancialgrp.com/
Recent News & Interviews:
- Bill Wilson discussed How to get to and Through Retirement https://authoritypresswire.com/interview-with-bill-wilson-president-of-wilson-financial-group-on-the-influential-entrepreneurs-podcast-discussing-how-to-get-to-and-through-retirement/
- Bill Wilson discussed Guaranteed Income https://authoritypresswire.com/interview-with-bill-wilson-president-of-wilson-financial-group-on-the-influential-entrepreneurs-podcast-discussing-guaranteed-income/
- Bill Wilson discussed Estate Planning https://authoritypresswire.com/interview-with-bill-wilson-president-of-wilson-financial-group-on-the-influential-entrepreneurs-podcast-discussing-estate-planning/