Evaluate Income Sources Before Retirement

    Published: 06-16-2009
    Views: 4,496
    Financial Advisor Ric Edelman talks about how to evaluate your income sources before retirement.

    Ric Edelman: Hi! I am Ric Edelman. Thinking about retiring? Well, evaluate what your sources of income will be before you retire. You know how much money you spend on a monthly basis, now figure out where that money will come from. Social Security, pension, your investments, it's not as simple as it looks. If you're getting a pension, will you collect a lump sum or a monthly payment, single life or joint and survivor benefits, indexed to inflation, all this will affect how much money you receive and whether you will have enough?

    When you add all your income together, will it cover all of your expenses, and don't just think about today's expenses, think about expenses 20 years from now, after 20 years of inflation. This means you might need to revise your investment strategy, the way you have handled your investments over the past 30 years might not be the way you should handle them for the next 30 years.

    The past 30 years while preparing for retirement you were focused on asset accumulation, but when you're in retirement you need to focus on income. A big part of income is keeping pace with inflation and the increasing cost of living. And that means you might need to adjust your investment asset allocation, you also need to make sure that a portion of your assets are flexible and liquid so that you can meet needs, but you don't anticipate. So evaluate your sources of income before you retire.