Typically, retirement income consists of pensions from work and the government (If you’re an American receiving Social Security and an Israeli pension, see our free video webinar on the “Windfall Elimination Provision” that will cut your Social Security payments).
For many retirees, pensions aren’t enough to meet their needs. These folks make up the difference by withdrawing from their savings and investment accounts.
Does a shrinking balance sheet spell poverty?
When planning for retirement, make your money work for you, and place it in income-producing investments as well as investments that protect its real value. This way, when you inevitably withdraw from your saving and investment accounts, the shrinking balance doesn’t make you feel poor, as it is a scenario you planed for.
Wealth isn’t only about the figures on your balance sheets. It also relates to the way you feel. For example, one person may own a mansion and not be satisfied, while another may be living in a rented apartment and be very happy.
Meeting with clients over the years taught me that there are three ways in which a person feels rich, regardless of his actual level of financial wealth:
* if he is able to spend money on his family,
* if he is able to give to others, and
* if he is not in debt
To a certain extent, though you might not be able to control the amounts of money you have in investments, you can manage each of these three elements by including them within your financial plan.
Creating a snapshot of your financial situation allows you see your entire financial picture and prepare for the day when you will make the switch from amassing savings to withdrawing from savings. Try this free online tool, to help you prepare for your retirement. After seeing the results, consider preparing a complete financial plan to help you transition from working to a fiscally successful retirement.
If you plan your retirement carefully enough, you will hopefully not only be rich on paper, but you will also feel wealthy by achieving your financial goals.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published July 13, 2015.