Maintaining Altitude
There is no one-size-fits-all plan for retirement income, but one thing I always look for when creating a retirement plan for my clients is altitude. Altitude provides time and space, and altitude, at a high enough level, is self-sustaining, like a glider in an updraft.
If you go to Investopedia and look up “altitude” as a financial planning term, you won’t find the definition. I made it up. When we review retirement plans with clients, I am likely to say, “your plan has excellent altitude” or, “we need more altitude, so you do not outlive your money”.
Altitude is your invested asset balance if you have not already figured it out. At any age, invested assets provide protection and options, but a solid and sustainable balance is critical in retirement. You may have some income sources at retirement, such as pensions, social security, or rental income. These income sources play an essential role, but they do not protect you against uncertainty the way invested assets can.
Altitude is something we model and monitor carefully during retirement. A high asset balance will likely gain altitude over time due to the return on investment. You can withdraw money regularly from a high-altitude retirement plan, and it will still gain altitude. A high-altitude plan allows for increased withdrawals over time to account for inflation. If unforeseen circumstances arise, a high-altitude plan has enough flexibility to handle those circumstances.
In the final chapters of our lives, we want to soar to new heights, lifted and safely held high above the mountaintops. Insuring sufficient altitude early on and maintaining that altitude is how we achieve this objective.
Those are my thoughts, have a great Thursday!
~ Rob
