Wealth vs. Income: The Crucial Retirement Question Asset Strategy

You may have built up a considerable sum of assets as you approach retirement. But not all assets are the same when it comes to planning for retirement.

Here’s an example: you may have paid off your home. But your home probably isn’t going to generate any income during your retirement. A home is a good example of an asset that isn’t easily liquidated and an asset that doesn’t always generate income. While owning a home can be a symbol of wealth, home ownership alone isn’t necessarily going to carry you through your retirement. When it comes to retirement, the question is about how to utilize your assets to help cover your costs and lifestyle sustainably—a much different question than simply having a high net worth.

When you are designing your financial plan, it can be crucial to understand the difference between an asset that generates income and an asset that represents wealth. Passive income streams can be a very useful tool to help mitigate retirement costs and potentially reduce the amount you need to withdraw from your savings when you retire.

Stocks with dividends, rental properties, and stocks with high expected returns are all options that may potentially result in income streams. Recently, retirement planners have been leaning toward a strategy called total return, using financial vehicles like those we just mentioned. Essentially, the idea is that you want to try to maximize the return on your investments in assets that may generate wealth while you aren’t working.

It’s also important to be strategic about how you move money and turn your assets into potentially income-generating ones. If you aren’t careful, you can end up with unexpected tax burdens as well. Designing a financial plan that considers the effects of taxes on your potential income streams is also usually good practice.

There is a lot that goes into a retirement plan. You spend most of your life saving for retirement, but when you begin to plan for the utilization of your savings, you’ll find that the strategies change. Rather than thinking about how to save as much as possible, you have to shift to a plan for how to make your money work for you. It’s not just about owning things–it’s about covering your costs and being prepared for expenses throughout your retirement.

However, that’s easier said than done. Each person has a unique wealth and income situation, and a great strategy for one person could be highly costly for another. To identify what may work well for you, reach out to one of our advisors today for a complimentary review of your finances.

 


Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.

This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.

Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

There are material risks associated with investing in real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal.

Advisory services offered through Asset Strategy Advisors, LLC (ASA). Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Insurance offered through Asset Strategy Financial Group, Inc. (ASFG). ASFG and ASA are independent of CIS.

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