UlTImATE SUccESS GUIdE
affect these income sources. Once your spouse passes away, the
smaller of your two social security checks will go away and if
a pension income only has a 50% or 75% spousal option, the
combination of both reductions could have a big impact on the
person left behind. Once we have a clear picture of these areas,
this will tell us if we are going to need to generate income from
our investments or not. For most people the answer is that we
will need to do that, which leads us to.....
- Investment Planning: Investment planning should first and
foremost be structured in a way to support your income plan.
If we are going to need income from our savings in retirement
it is critical that the income have three main characteristics: (i)
Be Secure, (ii) Be Predictable and (iii) Last for both lifetimes.
I have met with countless people who have had to reduce their
lifestyle or even go back to work, because they didn’t under-
stand this core principle. The good news is that rarely is it nec-
essary to commit all or even most of your retirement savings
to your income plan. Often we can create a secure income plan
with less than half of your savings and at that point we can in-
vest other dollars for long term growth, inflation protection, etc.
So the main question to answer when doing income planning is
what job are we asking different pieces of our portfolio to do?
Because, as I said earlier, the types of investments that will do
really well for income planning aren’t usually the best for long
term growth and vice versa. When investment planning is done
correctly, it is one of the last pieces of the retirement planning
process. This is because we must know the answers to all of
the other questions before we chose the investments. For many
people in my field, it seems to me that it’s all about picking the
investments. I have no idea how you can do a good job of that,
if you haven’t answered all of the other questions first.
- Legacy Planning: Legacy Planning is about what you will
leave, to whom, and how you can avoid leaving most of it to
Uncle Sam. A common misconception here is that a trust will
take care of all of your legacy planning tax problems. It is true
that certain types of trusts will help you minimize estate taxes,
but the bigger problem for most of us is going to be how to deal
with income taxes that our loved ones may be hit with once the
