Retirement is something most people think about every day. It’s a time to relax, travel, or take up hobbies and projects that there hasn’t been time for.

But before those dreams become reality, there are two important steps that you should take: 

1. Develop a comprehensive retirement plan
2. Ensure you have amble retirement income from your investments that will sustain your retirement journey, which could be 30 years or more  

Calculating how much income you’ll need for retirement is one of the most complex components of a retirement plan. Questions such as which type of investments you should consider to generate a steady income stream should be analyzed as part of your retirement planning efforts.

Bulman Wealth Group focus is on retirement planning and wealth management in Roseville and California. We’re dedicated to assisting individuals and families navigate the complexities of retirement and income planning.

In this article, we’ll explore the need for a comprehensive retirement plan, principles of wealth management, and three common investments used to produce income in retirement.

Understanding Retirement Planning in Roseville

Let’s face it: Planning for retirement can be overwhelming. It can be complex and time-consuming, requiring careful thought and strategic foresight. There are many factors to consider, including rising inflation, healthcare costs, potential fluctuations in the stock market, longevity, and life-changing events.  

However, creating a comprehensive retirement plan can be incredibly beneficial and serve as a roadmap for your financial future. 

Your retirement plan should go beyond simply saving money. It needs to involve a deep dive into your current financial situation. This examination encompasses a detailed analysis of your income streams, including your salary, potential pensions, investment income, and Social Security benefits. 

Then, you should assess your current assets, including retirement accounts such as 401(k)s and IRAs, along with other savings and investments. 

After analyzing your income and assets, the next step is determining your retirement goals and aspirations. This process requires calculating your expenses to determine your current cost of living and then determining the standard of living you’re aiming for in retirement.

Watch our new video on uncovering the most common financial mistakes made by retirees. 

Key Principles of Wealth Management

Wealth management is a comprehensive set of financial services aimed at helping you pursue financial independence. Wealth management encompasses investment advice, retirement planning, tax strategies, and estate planning.

A well-crafted wealth management strategy tailored to your needs, risk tolerance, and tax situation can potentially help you generate consistent income throughout your golden years.

A cornerstone of any sound wealth management strategy is diversification. Investing solely in one asset class could expose you to unnecessary risk. You can smooth out market fluctuations and create a more balanced investment approach by diversifying your portfolio across various asset classes, such as stocks, bonds, real estate, and cash equivalents.

Another critical component of wealth management is risk management. Most investments inherently carry some level of risk. Understanding your risk tolerance and developing a strategy that aligns with your comfort level is imperative. This process may require refining your asset allocation and integrating investment strategies to minimize potential losses.

Wealth management investment strategies are not one-size-fits-all solutions. Your retirement goals, risk tolerance, income needs, and time horizon are all unique to you. So, your investment strategy needs to fit your preferences and complement your retirement income plan.

3 Potential Income-Producing Investments for Retirement

Now that we’ve laid the groundwork for retirement planning and wealth management, let’s explore specific investment options that may potentially generate income. Here are three common options:

1) Bonds and Fixed-Income Securities

Bonds are IOUs issued by governments and corporations. When you invest in a bond, you’re essentially loaning money to the issuer in exchange for a fixed interest rate paid out over a set period. This predictable income stream can be a valuable asset in retirement. Bonds tend to be less volatile than stocks and offer stability.

About tax considerations, interest income from taxable bonds is taxed as ordinary income according to your current tax bracket. In contrast, interest from municipal bonds is tax-exempt at the federal level if the bonds are issued by your state of residence or a locality within it.

Potential Benefits and Risks to Retirement Portfolios

The potential benefits of bonds are clear: they may potentially provide a steady income stream and are generally considered less risky than stocks. However, it’s important to remember that bond prices can fluctuate in response to market conditions, and interest rates can also impact their value. 

Additionally, bond yields (the annual return you receive on your investment) tend to be lower than expected from stocks.

2) Dividend-Paying Stocks

Dividend-paying stocks are shares in companies that regularly distribute a portion of their profits to shareholders. These payouts can be a valuable source of income for retirees. Look for companies with a history of consistent dividend payments. Although there’s no guarantee these dividends will continue indefinitely, they could be consistent income producers.

Dividends from stocks are generally taxed in one of two ways, depending on their classification as qualified or non-qualified. Qualified dividends are taxed at the lower long-term capital gains tax rates, which are 0%, 15%, or 20%, depending on your overall taxable income. To be considered qualified, dividends must be paid by a U.S. corporation or a qualifying foreign corporation and held for a specific period: more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.

Potential Benefits and Risks to Retirement Portfolios

Dividend-paying stocks offer the potential for dual income streams. In addition to receiving regular dividends, you may also benefit from capital appreciation, which is the growth in the stock’s price over time. However, it’s important to note that dividend stocks can undergo significant price volatility, leading to potential losses if sold at a lower purchase price. Also, some companies may reduce or even eliminate their dividend payouts.

3) Real Estate Investment Trusts (REITs)

REITs own and operate income-producing real estate, such as apartments, office buildings, or shopping centers. Investors can purchase shares in a REIT, gaining exposure to the real estate market without the hassle of directly owning and managing properties. REITs are required by law to distribute at least 90% of their taxable income to shareholders, making them a potentially attractive source of passive income.

Dividends from REITs are typically taxed as ordinary income at your current income tax rate and are considered non-qualified dividends.

Potential Benefits and Risks to Retirement Portfolios

REITs offer the potential for steady income and long-term capital appreciation. However, they also come with risks, including sensitivity to economic downturns that affect the real estate market. Rising interest rates can also tighten financing conditions, impacting property values and overall REIT performance.

This is just a brief overview of three common potential income-producing investments. The suitability of each option will depend on your circumstances and risk tolerance. 

Consulting with an experienced fiduciary financial advisor in Roseville can help you determine what investments are the best fit for your unique retirement goals.

Leveraging the Experience of a Financial Advisor in Roseville

Knowing which investment options are best for your specific needs is best served by working with an experienced financial advisor who can develop a plan that addresses those nuances.

Personalized Guidance Tailored to Your Individual Needs

The right financial advisor will take the time to understand your unique financial situation. Based on a comprehensive analysis, they’ll develop a customized investment strategy aligning with your retirement plan.

Access to Experience and Market Insights

Experienced financial advisors should understand the financial markets and investment strategies. It’s their job to stay up-to-date on current trends and economic conditions, allowing them to make informed investment decisions about your assets. This knowledge can be invaluable, especially during periods of market volatility.

Ongoing Support and Monitoring

Retirement planning isn’t a one-time event. Your financial advisor should be there for you throughout your retirement journey. They’ll regularly monitor your portfolio performance, adjust your strategy to account for life changes or market fluctuations, and help ensure your plan remains on track to meet your long-term goals.

How Bulman Group Can Help You With Retirement Planning in Roseville

At Bulman Wealth Group, we are fiduciaries committed to your best interests. What’s a fiduciary? A fiduciary is an advisor with a legal obligation to act in your favor, not just sell products that might benefit them financially. 

Our team of experienced fiduciary financial advisors in Roseville takes a client-centric approach, meaning we take our relationship with you very seriously.  We believe in establishing long-term partnerships with our clients. This allows us to deeply understand your evolving needs and circumstances, enabling us to make informed recommendations and adjust your retirement plan as your life progresses.

Our style is to provide you with clear, open, and frequent conversations with you. 

Don’t let the complexities of the financial markets or the burden of making investment decisions keep you from pursuing your retirement dreams.

Contact Bulman Wealth Group for a complimentary consultation. Let’s discuss how we can help you plan for a prosperous retirement.