When it comes to planning for your retirement you need to have a plan. With people living longer, without sound investment and income planning advice you could find it challenging to maintain the lifestyle you have become accustomed to once you retire.

When it comes to how you are investing, you need to change your approach once you decide to retire. Why? Because prior to retirement you are in what RJG Financial & CPA Services calls the “Accumulation Phase.”

During the “Accumulation Phase,” you are working on preparing by accumulating your wealth and building up your retirement funds in preparation for the eventuality of your retirement.

But what about when you are within 10 years of retirement? What do you do when you are ready to shift gears to plan what your income will look like after you stop working?

Now you enter the “Distribution Phase.” Your focus shifts from accumulating the funds necessary for a secure retirement to making use of them.

But this is not just a switch to be flipped. There are three things that you should consider for your investments:

  • Cash
  • Protected Growth
  • Risk Growth

The Traffic Light Approach

As you enter into your “Distribution Phase” you still need your money working for you. You need to determine the balance between immediate needs, ongoing needs, and future needs.

Enter the Traffic Light Approach. This color-coded approach is a perfect reflection of how these needs can best be addressed.

Red

This represents your Risk Growth. That includes higher returns, but also higher risk. You also have to choose between what’s taxable and tax deferred. There may additionally be limited liquidity.

“Red money” is the funds you risk on the stock market and similar investments. The rewards can be high, but so, too, can be the risks.

This is red is because, like a traffic light, you should stop (and consider) before proceeding.

Yellow

This represents bank-type assets. This is going to offer the lowest returns, but the highest liquidity. There is no risk, but the return is also fairly low.

“Yellow money” is the funds that you can get at immediately, with few or no penalties.

This is yellow is because, like the traffic light, you should proceed cautiously.

Green

This represents Protected Growth. These options offer you moderate returns, as well as partial liquidity and withdrawal options.

“Green money” are the funds that off your guaranteed lifetime income, protection of your prinicipal, and retention of your gains. You have some green money already, including Social Security, some pensions, certain Government bonds, and various other investments.

This is green is because, like a traffic light, you can proceed with confidence.

You need to understand what your best investment and income planning options are. Hence the RJG Financial & CPA Services 3 Step Approach – Educate, Evaluate, and Analyze.


RJG Financial & CPA Services focuses on providing education and information to help you understand retirement income and CPA guided tax planning planning in your retirement options.