Retirement Income Planning

During retirement most people need income from their investment assets to supplement social security and/or pension income. The fear most people have is if they begin to take income from their investments they will deplete their assets and outlive their money. In addition, clients often doubt their ability to obtain market returns which are greater than their rate of distribution thus depleting their pool of assets. This is a serious concern especially if the portfolio is structured in a way that relies on principal increases in market value.

At Compass, we seek to structure portfolios to last throughout a clients retirement years while they are taking distributions. To be successful, cash-flow becomes a major concern and goal. In other words, if someone is taking out 10% of their portfolio per year and we can only generate 3% in cash flow then we need 7% of principal value increases to break even and keep the portfolio from depleting. This is a risky scenario because the account must increase 7% in order to cover the distribution.

In an attempt to reduce the risk and extend the life of the assets we structure client portfolios that rely little upon the ups and downs of the market but rather have significant new cash constantly coming into the portfolio. Though it can be more difficult than it sounds to accomplish, this is the cornerstone of what we strive to do for our clients.

• Minimize reliance on the ups and downs of the market
• Create cash sufficient to cover distributions
• Use high quality investments
• Manage income and risk goals