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Setting the Floor Level of
Retirement Income Needed
Abstract:

At what age do we accept that we have achieved the most affluent lifestyle we will achieve in life? Do we then take steps to
ensure that our future lifestyle is never any less affluent? Or do we accept that our level of affluence may change in the
future, sometimes by our own design and sometimes by factors outside of our control? How much fluctuation are we
willing to accept? How much may we find necessary to accept? What trade offs are we willing to make now to have a better
lifestyle in the future? These are some of the real world questions that traditional financial and retirement planning tend to
skirt in favor of more simplistic assumptions.

Conclusion:

So in conclusion, what are some of the key points we can take away from these simple examples and discussion?

  1. The appropriate level of flooring varies from one client to another, even when those clients have similar financial
    circumstances;
  2. The appropriate level of flooring, will rarely be level throughout retirement, due to changing lifestyles and needs and
    objectives at different life stages;
  3. The portion of the floor that the Retirement Management Professional needs to construct at different phases of
    retirement may be very different for many reasons:
  4. The level of flooring needed may be different
  5. The portion of the floor met by pensions or fixed annuities will most likely be steadily decreasing in real dollar terms
    due to inflation
  6. Employment income may be part of the flooring, particularly early in retirement

All of this points to both the complexity of the challenges in creating a comprehensive retirement income plan for your
clients, as well as the invaluable service you can provide by applying this level of personalized analysis and advice.
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