What A Difference A Year Makes

Paul Durso Academy, Income Planning, Insight Investing Video

Over the years I have been fortunate to see, and learn, a lot in the financial industry. One of the biggest lessons I have learned is how concerned people are heading into retirement. If you are like most, then one of the biggest reasons for your concern is you may not have saved enough money and you fear your money will run out.

I want to address this concern.

Wall Streets Broken Model

What is Wall Street’s model and why is it broken? I am so glad you asked. Wall Street’s retirement income model is based on a distribution rate. Early thinking with their philosophy set the distribution rate at 6%, now it is 4%, and I hear they are ready to drop that to 3%. That means you can take your savings and multiply it by that rate, and the result is what you should “comfortably” expect for income, plus any other income streams you might have already. The problem is that this model is broken. As you can see from the video, this model’s success is based on timing. If you retire while the market is going up, you are fine. If you retire during turmoil, you may be destined for failure.

I don’t know about you, but I have no idea which direction the market is heading. I have my beliefs, but truth be told, I have no clue. This broken model is why you and so many others fear retirement. The market plays too big a part in your success.

Sanity in an Insane Market

An alternative to this is dividend income. If you know me, then you know that I am a huge fan of dividend income. The biggest reason is that it provides predictable income even though the market is completely unpredictable. If you watch the video, you will see just how important dividend income is to retirement. It can be the difference between success and failure.

Stock prices rise and fall based on factors that are difficult at best to determine. Stock dividends rise and fall based on company financials and typically only change a few times each year. If your biggest concern is retirement income, then first you need to put together a plan, and second you need to put together an income model that fits your lifestyle.

If you want to learn more about dividend income, please feel free to get in touch with someone here.