Retirement Income Fundamentals

Retirement Income Fundamentals

When it's time to turn savings into income, start with a big-picture overview on generating income that lasts. Whether you plan to build your own retirement portfolio or have it professionally managed, you can count on us to help you succeed.

Start with these nine tips.

1. Review your situation. 2. Maintain a year of cash. 3. Consolidate and centralize income. 4. Match your investments to your goals and needs. 5. Cover essential expenses with predictable income. 6. Don't be afraid to tap into your principal. 7. Follow a smart retirement portfolio drawdown strategy. 8. Rebalance annually to stay aligned with your goals.1 9. Stay flexible and re-evaluate as needed.

We're ready to help with your retirement income.

? Call for a personal retirement consultation2 at 1-877-673-7970. ? Learn more about how to generate retirement income at generateincome. ? Read more about these fundamentals at incomestrategies. ? Visit incomefundamentals.

1Rebalancing does not protect against losses or guarantee that an investor's goal will be met.

2The consultation is available only to clients with at least $25,000 in assets at Schwab or prospects with at least $25,000 in assets available to bring to Schwab. Individualized recommendations are available only to Schwab clients and are limited to assets held in a Schwab retail brokerage account. Information provided to prospects, or pertaining to assets held outside of Schwab, as part of the consultation are examples of the kinds of recommendations available on assets held at Schwab; these examples do not constitute recommendations, solicitations, or investment advice.

Retirement Income Fundamentals

1

1. Review your situation.

? Know how much money you've earmarked for retirement, where you keep it, and how much, if

anything, you want to leave to heirs.

? Estimate monthly and annual expenses and create a retirement budget. Break out expenses into

two categories: those that are essential (such as housing and health care) and those that are discretionary (such as travel and entertainment).

Use our budget planner at budgetplanner.

? Determine how much of your spending needs are covered by predictable income sources (such

as Social Security) and how much (if anything) you'll need to cover with income from your retirement portfolio.

Estimate Social Security payments at estimator.

Estimated expenses

Predictable income sources

What your portfolio must provide

What you can do now:

? Use our Retirement Savings Calculator tool to see where you stand.

Go to retirementcalculator.

? Learn more about how to generate retirement income at generateincome. ? Call for a personal retirement consultation2 at 1-877-673-7970.

Retirement Income Fundamentals

2

2. Maintain a year of cash.

Set aside an amount equivalent to what you'll need from your portfolio for at least a year.

This is the money you'll use--along with your sources of predictable income--to cover all expenses throughout the year.

Where you might keep this money:

? Checking or savings accounts ? Money market accounts ? Short-term CDs--depending on rates and when you might need the funds ? Combination of accounts

Tip

To avoid having to sell investments in a prolonged bear market, consider keeping one to four years' worth of portfolio withdrawals in more liquid investments.

What you can do now:

? Read "What About Cash?" at whataboutcash. ? Learn more about how to generate retirement income at generateincome. ? Call for a personal retirement consultation2 at 1-877-673-7970.

Brokerage and insurance products: Are not deposits ? Are not FDIC-insured ? Are not insured by any federal government agency ? Are not guaranteed by the bank or any affiliate of the bank ? May lose value

Charles Schwab & Co., Inc. and Charles Schwab Bank are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products are offered by Charles Schwab & Co., Inc., Member SIPC. Deposit and lending products and services are offered by Charles Schwab Bank, Member FDIC and an Equal Housing Lender.

Retirement Income Fundamentals

3

3. Consolidate and centralize income.

? Consolidating and centralizing accounts as much as possible can make it much easier to manage

your investments and track your income and spending patterns.

? When possible, you may want to deposit your predictable sources of income into the account

where you keep your year of cash. Or, you might choose a similar type of account where funds can be easily transferred.

Pension

Dividends & interest

Mutual fund

distributions

Social Security

Single Account

Rental income

What you can do now:

? See how you can create your own paycheck at createyourpaycheck. ? Call for a personal retirement consultation2 at 1-877-673-7970.

Retirement Income Fundamentals

4

4. Match your investments to your goals and needs.

As you begin to rely on your retirement portfolio for income, you may feel most comfortable investing heavily in income-generating bonds and CDs.

But to counteract the long-term effects of inflation, you may need to keep a portion of your savings in growth-oriented stock investments--like mutual funds, ETFs, and equities. Consider a progressively more conservative mix of stock and fixed income investments as you move through retirement and your portfolio has fewer years to fund.

How You Might Adjust Your Portfolio Over Time

60% stocks

40% fixed income & cash investments

60% fixed income & cash investments

40% stocks

20% stocks

80% fixed income & cash

investments

Age 60?69

Age 70?79

Read more about these allocations at fixedincomerole.

Age 80+

? For the stock portion of your retirement portfolio, consider focusing more on dividend-paying

stocks and stock mutual funds.

? For fixed income, consider bond and CD investments with a mix of maturities that offer

predictable income and liquidity.

What you can do now:

? See how you can create your own paycheck at createyourpaycheck. ? Call for a personal retirement consultation2 at 1-877-673-7970.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Investing in dividend stocks carries some risk--the same as with any other type of stock investment. With dividend stocks, you can lose money; for example, share prices can drop (regardless of whether the company pays dividends), companies can reduce or eliminate dividend payments at any time, and inflation can reduce savings.

Retirement Income Fundamentals

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download