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Six steps for creating your retirement income plan

Transitioning from saving for retirement to managing income during retirement can be a challenge. Sitting down and doing the math to figure out how much your savings will potentially yield in retirement is not an activity that most of us look forward to.

Walking through a planning process is a good idea to help you:

  • Determine how much money you may need in retirement to cover your expenses
  • Identify income sources and retirement assets available to help fund your retirement
  • Create a strategy for turning retirement savings into cash flow to help cover expenses
  • Determine if your withdrawal rate from savings is likely sustainable throughout retirement

To begin building your plan, here are six steps to walk through with your financial professional.

Step One: Defining Your Goals

The first thing your financial professional will likely do is help you to evaluate your retirement goals. He or she will ask you when you would like to retire and about your general retirement plans.

Step Two: Gathering Information

Your financial professional will need to gather basic information, such as your date of birth, your expected retirement year, your current retirement savings and any other benefits you expect to receive in retirement (such as Social Security or a pension plan).

Step Three: Analysis

It's important to take an honest look at your current financial situation. That analysis should include a review of your overall asset allocation, your expected income during retirement and an estimate of how long your savings may last.

Step Four: Evaluating Your Options and Examining Your Asset Allocation

If the analysis reveals that you aren't quite able to achieve your income goals, your financial professional can help you evaluate options. For instance, you can review the potential impact of pulling back on expenses, boosting your savings level, adjusting your investment allocations to meet your personal needs and tolerance for risk or working a little longer.

Step Five: Making Adjustments

If needed, your financial professional can help you make any financial adjustments. He or she can help you increase your retirement plan contributions, roll over assets from a previous employer's retirement plan or open a new IRA.

Step Six: Choosing Income Solutions

Once your current situation and retirement goals have been evaluated, your financial professional will suggest retirement income solutions that make sense for you. He or she can help you to develop a strategy now and then work with you once you've retired to help monitor your withdrawal rate.

Talk to a financial professional

Don't have one? Find out how a financial professional or advisor can help.


More articles from the introductory issue of The Principal Retirement NewsletterSM

Download the entire introductory issue (PDF: 860 KB)

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