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Retirement and Distribution Planning

Retirement is a way of acknowledging that you will be unemployed for the rest of your life. Retirees don’t have the ability to make up losses in the stock market simply by adding to their investments at lower prices. Because of this, some retirees will invest their money too conservatively or invest for yield with the hope of just spending their earnings. With either of these strategies, they face the possibility of running out of money, having inflation eat away at their purchasing power, or they spend too little early in retirement when they have the health to enjoy a more active and expensive lifestyle.

Here at J Matrik Wealth Management, we utilize a strategy of segmenting a client’s assets when they are approaching or in retirement. We call this “bucketing.” The bucketing approach dictates a client’s investment strategy based on when those assets will be used in their retirement. Assets that are needed to fund the 1st few years of retirement are invested very conservatively with no stock market risk. The entire amount allocated to this bucket, earnings and principal, is spent during these years. Assets that will not be needed for 10 or more years have increasing percentages of stock exposure. This increased stock exposure allows the investor to outpace inflation.

This strategy reduces the emotions tied to investing. It also allows our clients to stay invested over longer time periods as they know during periods of market volatility their “bucket one” assets are not at risk of market decline.

The bucketing is customized for each client, because our clients have different fixed income sources, such as Social Security or pension, and are retiring at different ages. Their buckets are revised each year based on any changes in their income goal and due to the passage of time. If stock market performance is good, we have the flexibility to realize those gains and refill the early bucket money. If stock market performance is poor, we give the market time to recover.

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