Friday, May 7, 2021
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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
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WEALTH
An Equity Estate of Mind
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world a better place.
(509) 665-8349
EquilusCapital.com
S232332-1
Equilus Capital Partners, LLC