Retirement Paychecks, Market Downturns & Variable Income

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Part of putting together these pieces is answering the questions we hear most in one-on-one conversations. This month:

1. How do you turn your portfolio into a resilient paycheck?

2. How do market downturns affect my income in retirement?

3. How do you build financial consistency when your income is variable?

If you think of someone with similar questions, please pass this along.

Creating Your Retirement Paycheck

For most of your working life, your portfolio had one mission: To Grow. You automated contributions, stayed invested through the dips, and let compounding work. So, what changes the moment you retire? The Mission.

Your portfolio now needs to generate a sustainable paycheck, consistent and inflation-adjusted, funding your lifestyle whether the market is up, down, or sideways. Most people don't realize how different these two jobs are until they're standing at the door of retirement holding an account, they've never actually drawn from. It's why families who've accumulated $2–3M can suddenly feel anxious about their finances.

The good news is you're not the first person to ask this question, and we have a roadmap for it. If you're not a client, our Discovery Workshop is a good place to start. It's complimentary and designed for exactly this moment.

We’ll help you map out:

1. Your financial world (portfolio, Social Security, income streams, cashflow, etc)

2. Articulate and document your priorities in retirement

3. Help you begin a plan to connect what you have to how you want to live

You can request more info about our personalized Discovery Workshops from our team here.

Resilient Retirement Paychecks

Many families retiring today remember 2008, but they weren't yet thinking of their portfolios as an income source. Now they are, and the question that follows is: would we be ok if we faced another recession in the next few years? What we've learned over more than 20 years is that verbal reassurance is far less reassuring than knowing what the plan is when the market takes its next correction.

For most of our clients, that plan is a bucket approach.

1. The Store Bucket: Short-term living expenses (1-2 years) set aside in cash or short-term holdings, insulated from market volatility. If there’s a correction, we can mitigate the need to sell off parts of your portfolio at a loss. Money stays invested to participate in the recovery.

2. The Core Bucket: Similar to bucket one, but with slightly less conservative positions. These provide an additional income cushion while still aiming to participate in more aggressive growth positions.

3. The Explore Bucket: This bucket has two purposes: additional income in years when the market is strong while also staying invested more aggressively to fight inflation. Retirements are getting longer, life is getting more expensive, and many retirees should still have growth-focused portions of their investments. This isn’t for short-term income needs, but longevity.

When the market drops, you have more than you need in the first bucket to protect your portfolio. The long-term money stays invested and participated in the recovery. Your paycheck doesn't change with the headlines.

Financial Plans for Variable Income

Our partners Jeff, Meghan, and Mike recently spent part of an Untucked episode on irregular cash flow, bonuses, commissions, and RSUs. Three fundamentals from that conversation:

Know what your life actually costs. Flag large annual expenses and convert them to monthly equivalents: insurance, property taxes, and tuition. Most people underestimate their true monthly baseline because these don't show up on a regular schedule. We can recommend budgeting apps that are great for this.

Treat variable income as pre-allocated before it arrives. If a bonus lands with no plan, the money will find somewhere to go. Know your financial picture well enough that when it arrives, you already know what it's for. Large piles of cash are known to have bad effects on long term decision making…

Keep a working cash reserve. Not an emergency fund, but a reserve that floats you through the months when nothing variable comes in. When the bonus arrives, it refills the reserve and funds the plan.

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The Retirement Paycheck is one part of Your Retirement Gameplan, the planning process we take every client through. If you are heading into retirement and not sure how your income actually works yet, a good place to start is a complimentary conversation with one of our coaches. You can schedule one at financialcoachgroup.com/contact.

Not intended as a recommendation or offer of any specific advice or services. All investments carry risk, and past performance does not guarantee future results. For detailed information about our fees, services, and background, please view our regulatory disclosure materials on the SEC Investment Adviser Public Disclosure Website (https://adviserinfo.sec.gov/firm/summary/170478).