I specialize in retirement income planning and the following is an overview of my plan for harvesting of retirement assets. This plan is broken into two basic parts:
• Money needed 1-5 years out
• Money needed 5+ years out.
Whatever you need to supplement your Social Security and other income sources during approximately your next five years of retirement should be kept in readily accessible cash reserves, such as a savings account or a CD (certificate of deposit). There are many different options available to you.
Although a financial advisor can help you find investments for your 1-5 year money, you may not require an advisor to help with cash reserves and other fixed income assets for short-term use – you can generally manage this money yourself.
If you are looking for growth in your assets, the rest of your money not needed approximately five years out, should be maintained in a diversified portfolio of equity/stock market investments to try to achieve growth. This is where you need the help of a professional, as this is your longer-term investment money which you will try to grow and harvest from. Your goal is to harvest (withdraw) from these assets only when your return is above your target necessary to achieve your objectives.
I generally recommend one year of “need from assets” money be allocated into each investment category. This allows you to “harvest” for any given year from any investment, depending on which portion of your portfolio is doing best at the time of need – so you can harvest where there is bounty.
Finally, to keep this plan rolling forward, once each year, “fill-up” your cash reserves from your investments and other assets to maintain accessible cash for living expenses. In the event of multiple down market years, you would draw that year’s harvest from your cash reserves or fixed income assets, which prevents you from having to sell when the market is down. Remember, with investments you always want to try to “buy low, sell high”.
Obviously this is a very simplified overview of my plan for asset harvesting. The best place to learn more is in one of my retirement planning classes at Gwinnett Technical College. Please call our office at 770.931.1414 or log on to http://www.rogersgreen.com for dates and additional information. Or call Gwinnett Technical College directly at 770.995.9697 to register for Successful Retirement Planning or Financial Strategies for Successful Retirement. If you have no time to attend class, but wish to discuss your situation further, please call my office to schedule a complimentary consultation
Note: Investments in securities do not offer a fixed rate of return. Principal, yield, and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested.
Roger S. Green is a registered Representative with Cetera Advisors LLC, member FINRA/SIPC, with Green Financial Resources, LLC located at 3700 Crestwood Parkway, Duluth, GA 30096. Neither Green Financial nor Gwinnett Technical College is affiliated with Cetera Advisors LLC. Hear more “Your Green”, Saturdays at 3PM, on WNIV 970 AM or live at http://www.faithtalk970.com. Visit Roger’s website at http://www.rogersgreen.com.