Can Your Income Strategy Survive The Changes
“cha…cha…cha..cha…changes, turn and face the strange”
For better or worse, for good or ill, value judgements do not matter. The fact is, we have a lot of change going on right now in our country. Changes in legislation, changes in the executive branch, changes in media…always changes. While change is always with us and is a constant in our world, it can sure feel like change is happening faster and faster these days.
It is important in the face of change to ask the right questions. A good question that we often is ask is “Is this a good change or a bad change?” However, that can be a very personal question and often can let events that are outside of your control affect your day. A better question to ask is, ‘How should I respond to this change?” “Is my life directly affected by this change? If so, what actions can I take to adapt?”
If you are retired, or planning for retirement shortly, the question should be reframed to, “Is my income affected by this change? Is my income strategy predictable enough and flexible enough to withstand changes in legislation and changes in the economy?”
The two challenges every income strategy faces are in the question above. Predictability and flexibility.
When you retire, you need to know that the stability of your paycheck is going to be replaced by the stability of your new income stream. It helps to have some cash on hand, and designing a strategy that creates liquidity and the safety of money coming in when you need it. There are strategies and products out there that can help with creating some predictability in your retirement income. Oftentimes though that can be at the cost of flexibility in case something should change.
Just this week we saw potential signs of interest rates rising, possible healthcare cost increases, etc.
While you want your income to be predictable, can your strategy ensure the flexibility needed to change with the economic landscape?
A mainstay of planning for retirement is to have some exposure to bonds and equities as these instruments can provide flexibility and respond to economic changes. Interest rate changes, earnings forecasts, GDP growth or contraction, all of these occur and your need your strategy to have the flexibility to respond and take advantage of these changes.
How do you marry the two opposites of consistency and flexibility?
Put Time On Your Side
By segmenting your assets according to different time frames and income needs you can design strategies that allow for predictable income now, and flexibility for later in the future. Of course, there is no guarantee, but you can use time to your advantage. You can take predictable income from short-term time segments now, and assign riskier assets that can create flexibility to longer-term time segments.
The strategy mentioned is above is a preview of what we call Advanced Time Segmentation®. Our goal for you is that with an Advanced Time Segmentation Strategy you can have peace no matter what the economy is doing. This is what we do in the face of change, we strategize. Doesn’t your wealth deserve a strategy?