Income vs. Assets

Many people think, or are told by on-line financial calculators, that piling up on assets is the road to a smooth retirement. Financial advisors often have a self-serving interest (commission) in encouraging clients to invest more in assets. Wall Street looks at it as a “conservative approach,” implying that they would rather have money left over at death, than allow the money to run out too early. However, with the right planning and balance, both can likely be avoided.

Is it possible to save too much? Yes, if you aren’t balancing the present and the future. Analysts show high percentages of required savings, but those numbers often don’t include any pension, social security or other checks you may receive in retirement. The calculators are primarily asset-based, versus income-based, and therefore the calculations can be somewhat inaccurate. You could be unnecessarily investing too much of the present under these assumptions.

When planning for retirement, income can be a key force to your overall plan. Pensions, Social Security, IRAs, a new career, business or part-time work will all play a valuable role. If you are a homeowner, you should have some wealth built up in your home. Pay off the mortgage, live without debt, live comfortably within your means.

Everyone’s retirement goals and plan will vary. It is important to have a plan, stay on track for that plan, and work with an advisor you trust. Many people aren’t saving enough for retirement, and some are saving but not in the right way. If you are in either category, contact HLB Gross Collins, P.C. for a review of your retirement goals and we can help you get on track for a comfortable future, without sacrificing the present.