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About Capital press. (Salem, OR) 19??-current | View Entire Issue (May 7, 2021)
Friday, May 7, 2021 CapitalPress.com 1 Retirement planning for the lifestyle you love By L. JAKE CARPENTER Equilus Capital Partners The ability to enjoy the lifestyle you love when you reach your retirement age is a noble goal and one that may be attainable with proper planning. I am going to share a key concept behind the great transition from your income-earn- ing years, or “accumulation” phase of life, to L. Jake your retirement Carpenter years, or “distribu- tion” phase of life. For many, the accumulation phase starts in their mid-20s as they begin working, saving and growing their assets with the antic- ipation of retiring someday. Retire- ment is generally characterized by accumulating a certain amount of money by your full retirement age. This 40-plus year accumulation period is more critical than ever because most individuals entering the workforce today do not have the luxury of a pension. Reaching retirement can be compared to the climb from base camp to the summit of Mount Ever- est. This is an extremely danger- ous climb requiring years of prepa- ration, training and an immense amount of fi nancial resources. The ultimate goal for every climber is to reach the summit of this 29,000- foot beast of a mountain. Like the climber who reaches the summit of Mount Everest, once you reach your retirement, the real danger lies ahead. Many people focus their time and energy on the hard work of accumulating a cer- tain amount of assets by a certain age to reach their summit of retire- ment. But the crucial question now is whether or not they have a plan in place that gets them safely back down the mountain. There is a popular saying that “cash is king.” However, that is not accurate. In reality, “cash fl ow” is king! Equilus Reaching retirement can be compared to the climb from base camp to the summit of Mount Everest. For example, if you have a million dollars saved for your retirement, that might sound like enough money. But, if it’s in a sav- ings account that is earning you a 0.01% interest, and you withdraw $60,000 a year to live on, you will run out of money in less than 17 years because you have been spending down the principal with little to no cash-fl ow to generate more income and growth. The focus for retirement should not be only on accumulating assets, but it must also include a plan for how you will convert that cash asset into enough cash fl ow to support your retirement lifestyle. When considering how to con- vert cash into cash fl ow, there are some important questions to con- sider. How do I make sure that the cash fl ow will increase to keep up with infl ation? Will I receive that cash fl ow in a tax-advantaged way? And how can I create cash fl ow in a diversifi ed way without taking a lot of market risk? There are various places a mil- lion dollars could be invested, from the stock market to fi xed annuities. However, if you invest conserva- tively, you may not be able to earn enough to support your cost of liv- ing, and you could end up spend- ing down the principal. Guaran- teed interest products like fi xed annuities have a lower earning potential. If you withdraw more than 10% of the principal amount in a given year, you may be forced to pay penalties. On the other hand, if you take a higher risk position in a stock, bond or mutual fund portfolio, it may provide a chance at earn- ing the desired cash fl ow. Sig- nifi cant and sudden market cor- rections may bring about sudden losses that can put you at risk of having to stop drawing income to preserve the account. This can be detrimental if you rely on that income for basic living expenses, or it could cut into the stan- dard of living you have come to enjoy. Another investment option that may help you reach your retire- ment summit and safely descend is income-producing real estate. There are various real estate investment options that can sat- isfy everything from liquidity needs to more competitive returns for a longer-term hold and poten- tial tax advantages. Income-pro- ducing real estate may produce enough cash fl ow to meet income needs while also providing long- term growth through capital appre- ciation. This growth may provide an opportunity for you to increase your income over time to keep up with infl ation. A depreciation schedule can be applied in some cases creating a more tax-advan- taged delivery of cash fl ow or income. You can invest any type of money into income-produc- ing real estate if you are qualifi ed to invest. We provide an initial compli- mentary consultation to determine if income-producing real estate would be appropriate for you to consider as an asset to provide additional diversity, cash fl ow, and growth regardless of the stage of life you are in. Do not miss out on maximizing your tax-advantaged infl ation-adjusted income possibil- ities. Learn how to better diversify out of stocks, bonds and mutual funds, create steady cash fl ow, grow your accounts, and create tax advantages. Remember, it’s not about how much cash you have; it’s all about how much cash fl ow you can cre- ate. Cash fl ow is king! L. Jake Carpenter is vice presi- dent of investor relations at Equi- lus Capital Partners. YOU GROW CROPS WE GROW WEALTH An Equity Estate of Mind Together, we make the world a better place. (509) 665-8349 EquilusCapital.com S232332-1 Equilus Capital Partners, LLC