As a physician, your days have been filled, patient by patient, by making a difference in others’ lives. In fact, your career has been driven by this desire to heal and make change for the better. Saying goodbye to this life can be difficult, and we understand that the transition to retirement can be challenging both mentally and emotionally. This new stage of life also comes with a different way of looking at your finances. Now you must think about your income sources and the implication of all those tax-deferred balances. Let’s go over the following five questions to help you think strategically about your retirement income needs.

1. What Is Your Real Need?

This question seems so simple, yet it is often overlooked. Do you even know how much income you will need in retirement? The foundation of retirement income planning is having a clear picture of what you want in retirement and tracking your spending so that you know how much retirement will cost.

Before you can develop a plan for your retirement income needs, you need to have a goal and settle on the destination to which your plan will lead you. If you aren’t sure how much income you will need in retirement, I encourage you to go back and read last month’s article to help you get a clearer picture of your real needs.

2. What Income Sources Do You Have?

Once you know your goal, you need to take stock of the tools available to get you there. What income sources do you have? This could be anything from Social Security and pensions to annuities, rental income, or taxable brokerage accounts. It is important to analyze your alternative income strategies and review the cost benefits of each choice of potential income elections.

3. What Are The Tax Implications?

Having clarified the different income sources available to you, it is important to understand the tax implications of each one. You may have some accounts that are pre-tax and others that are post-tax, and then there is Social Security, which is taxed based on how much total taxable income you have. It is critical to review the tax status of your accumulated assets in order to develop a tax-efficient income strategy.

4. How Should The Money Flow?

Your cash flow is simply the flow of money into and out of your hands. A cash flow plan, commonly called a budget, is simply a written document showing where your money is coming from and where it is going to go.

While you are working, cash flow planning is simplified in that you usually only have one or two sources of income that are fairly fixed. All of your planning goes into the outflow, not the inflow, of resources. In retirement, it gets more complicated. You now have multiple streams of income and can sometimes turn them on or off at will. You need to do a more in-depth cash flow planning analysis to determine the best route for your assets to reach income.

5. What Is Holding It All Together?

You didn’t reach this milestone of retirement without years of hard work and diligent saving. Now that it’s time to begin drawing from your hard-earned resources, it’s critical to have a plan in place to protect it in the coming years. A disciplined process can help reduce the impact of short-term market volatility on your income and preserve your wealth for the rest of your life as well as the generations to come.

Retirement is a rewarding and fulfilling season of life to spend with family and friends, travel, take up new hobbies…the possibilities are truly endless. We at Cypress Wealth Services would love to partner with you, answer your questions, and help you retire with confidence that your funds will last as long as you do. Reach out to us to schedule an introductory meeting by calling our office today at 866.888.6563 or contacting one of our offices today.

About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With financial advisors in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit www.CypressWS.com or call 760.834.7250.