#3 Asset & Debt Issues
This is a series about the 6 key things to consider before you retire. If you would like to consider building a personalized Prosperity Financial Plan, don’t hesitate to reach out. Schedule a Meeting
#3: Asset & Debt Planning Issues
Your accumulated assets can create an income stream for retirement by throwing off dividends, interest, rents, income payments or royalties, or even through the sale of the assets to create needed funds. Asset allocation (e.g. stocks, bonds and cash) should be set up to support both income and needed growth to outpace inflation. And don’t forget to factor in tax-efficiency with asset location. Having the right assets in the right types of accounts can really pay off. There is an art and a science as to what goes where in taxable, tax-deferred and tax-free accounts, used strategically to yield the cash flows needed throughout your life and keep your taxes to a minimum.
Liquidity needs to be part of the equation too. The right level of liquid assets available when you need them can give you peace of mind when you might need it most. That could be during market volatility, which we’ve seen this year more than usual. Your risk profile comes to the forefront here. That includes BOTH risk tolerance (how you feel about risk) and risk capacity (how much risk do you need to take).
Entering retirement with significant debt in car loans, credit cards, parent plus loans, 401k loans or second mortgages can put unnecessary pressure on your assets. Any debt you carry into retirement needs to be factored into cash flow. Whether you are a Dave Ramsey debt snowball fan, or the debt avalanche method (see this link from Investopedia), debt payments need to be in your plan, and likely for as short a time as possible.
It’s good to have a plan, and someone to talk to with the knowledge and resources to help. I’m here for you.
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