Wealth vs. Income: The Crucial Retirement Question

Wealth vs. Income: The Crucial Retirement Question Bulman Wealth

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 mitigate retirement costs and 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 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 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 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.

Retirement has many moving parts and many important dates that should factor into a full pre-retirement timeline. If you realize you don’t have a comprehensive pre-retirement timeline planned out, Click HERE to reach out to one of our professionals today at Bulman Wealth Group for a complimentary review of your finances.

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Opinions expressed herein are solely those of Chris Bulman Inc. dba Bulman Wealth Group and our editorial staff. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual advisor prior to implementation. Investment advisory services are offered through Chris Bulman Inc dba Bulman Wealth Group, an SEC Registered Investment Advisor. Insurance products and services are offered through Chris Bulman, Inc. dba BWG Insurance Agency and Ameritas Life Insurance Corp., CA State Insurance License # 0M46922. Being registered as an investment advisor does not imply a certain level of skill or training.

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