Retirement Income Planning

Income Distribution and Tax Strategies used during distribution are fundamentally different from those used in accumulation. Proper income distribution planning is essential for managing your cash flow needs throughout retirement. This process involves creating a strategy that efficiently distributes income from retirement accounts, investments, pension options, and Social Security benefits to meet your specific retirement goals.

The Money Cycle


At Athena Legacy Solutions, we guide you through the three key phases of the Money Cycle: Accumulation, Preservation, and Distribution.

Understanding these phases is crucial to ensuring a secure and sustainable retirement.

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Accumulation

Preservation

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distribution

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Avoiding Common Pitfalls

One of the biggest mistakes people make is moving directly from the Accumulation phase into the Distribution phase without proper planning. Continuing to invest as you did during accumulation, while drawing on your assets to meet retirement cash flow needs, can jeopardize your financial security. Taking income or distributions from equity or growth positions during market corrections is a critical error. Markets always experience corrections, and while we can’t predict how long they will last, we can avoid the risk of depleting your savings by not selling growth investments during market downs. This is known as Sequence of Returns Risk and can significantly impact your financial security later in life.

The Importance of

the Preservation Phase

The Preservation phase is defined by the 5 years before and after you begin distributions. This period is crucial for protecting your assets and preparing for market uncertainties. The average bull market lasts 5 to 7 years, but the timing of the next market cycle is unpredictable. If you're nearing retirement, now is the time to prepare and ensure that your strategy is aligned with your future needs.

Strategic Differences:

Accumulation vs. Distribution

We often compare the Accumulation Phase to playing a game of Checkers, while the Distribution Phase is more like playing 3-dimensional Chess. The strategies required in retirement are far more complex, with subtle nuances and a higher degree of strategy. Mistakes during this phase can be difficult, if not impossible, to correct.

Accumulation Strategies are relatively straightforward and require just two moves:

Contribute as much as you can

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A pair of black and white circles on a white background.

Invest as aggressively as you can tolerate

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A black and white checkered chess board on a blue background

Distribution Strategies are far more intricate and involve considerations such as:

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Timing of claiming Social Security benefits

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Distribution tax planning

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Longevity risk

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Sequence of Returns Risk

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Long-term care expenses

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Health care costs

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IRMAA premium penalties

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Withdrawal rates

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Market volatility

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Roth conversion strategies

The Critical Question: Is Your Advisor an Accumulation or Income Distribution Specialist?

In retirement, what matters more: the rate of return on your investments or the reliability of your income? Our focus is on providing custom income and investment strategies that prioritize the stability and reliability of your income over chasing high returns.


Our Income Investment Philosophy:

  • Never take income from a growth asset: Learn more about our approach
  • Reliability of Income over Return on Investment: Our primary focus is ensuring that your income needs are met consistently.
  • Manage risk appropriately: Take on only the level of risk necessary to meet your income goals and sustain your cash flow over your lifetime.
  • Distinguish between manageable and unmanageable risks: We manage risks like loss of principal and volatility, while protecting against unmanageable risks such as short-term market performance and longevity.
  • Time in the market, not timing the market: Markets recover given time, so we focus on staying invested rather than trying to predict market movements.
  • Behavior and emotion management: Our strategies are designed to help manage the human behaviors and emotions that can derail long-term financial success.
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A retirement thinking partner you can trust.

Invest in Your Future

You don't need a one-size-fits-all approach with spreadsheets and numbers; you need a thinking partner who will help you achieve your Life Vision.


Working together, we will build your foundation, discover your vision, and align strategies to get you from here to there.

Looking for personalized financial guidance that fits your Life Vision?