Life Income Mandates – to secure Income for Life

How would you "Guarantee" to never run out of money!   From pension or selling a business, inheritance or life-savings, I'm speaking of five key "mandates" to safeguard your financial success and confidence.  When? ...soon as we meet together, and then consistently today and through your retirement years, even into your estate.   Why? ...because these mandates allow us to align your lifestyle and wealth to safely secure the life you want as well as the loved ones you hold dear.

Up to now has anyone been putting this together for you?  Are you 100% certain for your retirement, knowing how your money will last?  Is your current plan strategically protecting you from the ticking time bombs of inflation, illness, investment failure, fraud, and taxes?

Pic _ Time Bomb Money

DON'T LOSE YOUR MONEY -- DON'T LET IT BLOW !!

Here is a brief introduction to the 5 Life Income Mandates that powerfully secure you from the 5 ticking time bombs.  Follow the links and explore other articles in this site ...or simply let's speak together soon at your convenience.

Beth sold her business for a good sum and then discovered an urgent problem.  While she knew about drawing income from a business, she didn’t know how to sustain income from early-retirement through to middle & later years when her needs will rise dramatically.  How would she manage the risks of spending too much, earning too little, or paralyzing herself with endless worry that would sabotage her dreams?

Bill’s issue was his pension.  Learning how to personalize his pension plan (see his decision here) he decided to exit the traditional pension for a freer, more flexible income and lifestyle.  Full value in hand he could now forget about pension plan risks, chronic underfunding and all that!  But now like Beth he needed to focus on how to invest the money to sustain his lifestyle, ongoing income, and protection for his wife and family?  We'll follow up on these stories below...

More on Beth and Bill in a moment…  (also in modules to access via home-page on this website, and the book “A Lifetime Of Wealth – And How Not To Lose It.”)

Lacking Life Income Mandates

Pic -- Stacks of 100 dollar bills

Learn how to Safely Ladder Financial Security

People often reach me to review their investments and a financial plan if they happen to have one.  Most don't;  70% still have NO WRITTEN PLAN describing their goals for life and investing.  They have stocks or funds, insurances, homes and properties, but their files fall silent on how to reach goals and sustain what I call their Life Horizons.  Too often, people are reaching the future with depleted assets and paralyzing anxiety.

Lack of “life income mandates” means no one connected the dots from today’s assets to future spending.  Results include chronic worry and disillusionment, running out of money, losing the life dreams you've been wanting to fulfill.

Power of Five – Life Income Mandates

In my 2013 book I briefly outline five keys to sustain lifelong income.  These are not new.  They've been used effectively for 50, 100, even 200+ years.  I expand on the mandates in other parts of this website, hoping to highlight this "keel" that keeps your financial ship strong and upright.   Others can promote their fads (eg 1990s technology), fears that pay too little (<2% deposits), and various unproven promises.  I urge you to consider the power of five mandates to sustain your income and desired lifestyle.   In fact I welcome you to reach me directly and discuss how these can advance your own financial and life goals.

Global Dividend Income

Dividends have been called “widows and orphans” investments.  They fluctuate but still offer income from corporate earnings and should outpace inflation.  Today it is easier than ever to build a dividend focus including large, mid-sized and smaller corporations, diversified among various industries and parts of the world.

Global Real Estate Income

This can be property you own directly – focused on generating income.  To avoid management and tenant headaches you can use funds, pools, or stock companies.  You can diversify by region and globally, and among commercial office, retail, industrial and multiple residential developments.  Your goal is reducing risk while securing income that will rise over the years.   (Learn about strategies for growth and income from Global Real Estate.)

Global Infrastructure Income

Pic _ value of Life Income Mandates

POWER of 5 ... LIFE INCOME MANDATES

Also not new, just think of railroads, bridges and electrical utilities a century ago.  Yet a fund company recently eliminated the word “infrastructure” because advisors saw this as a “specialty” fund rather than a core and proven value.

How powerful is this area for your income?  Just remember how often you may:  pay a highway toll, feed a machine when you drive over a bridge, pay airport levies, hospital fees, etc.  Other infrastructure includes water and sewerage services, energy terminals (oil, gas, coal), solar and wind energy projects, even broadband and airwaves (communications).

Several countries’ pension plans have been investing in infrastructure …and for good reason!  Opportunity is vast to update and rebuild crumbling assets in developed nations, and create new developments in emerging and frontier nations.  All this will generate income, and you can be an owner via funds, pools, pensions or stocks that engage infrastructure to build income.  (Learn about strategies for growth and income from Global Infrastructure Income.)

Fixed income:  Domestic & Global

This includes domestic and global government and corporate bonds, mortgage securities, cash deposits, high yield, floating-rate, etc.   One of our greatest issues with fixed-income today is low interest rates.  When rates rise, bonds will lose value that may never be recovered - not even in 30 years!  Low rates, high taxes, capital losses, consumer and health inflation, can leave the unfortunate investor penniless.

Reason for owning this category is to always protect income you’ll need over the next three to seven years (a period within which we draw income from your "income reservoir").  If you have a certified financial plan, this should carefully reveal your precise investor profile and confirm your purpose for fixed-income – namely to guarantee your income needs for the next 3-7 years.  Beyond that you can optimize your future with a clear focus on the other life income mandates.

Life Pay-out Annuities

Life annuities are a fifth layer or you can lump them with fixed-income.  Many refuse life annuities believing they too little due to low interest rates - but that’s a small factor today.  Life annuities offer mortality credits you won’t get anywhere else.  They can also guarantee income beyond your lifetime to family, friends or charity.  But only an advisor who is licensed for life insurance can discuss such strategies.

If you’re too young to optimize income from annuities, it’s still good to know what these can offer you in future.  By laddering annuity income payments, eg from age 72, 75, 78 (if suitable) you can enjoy 100% guaranteed income for life.

Beth who sold the business (above) may want to avoid risk and reduce tax from age 60 to 105 using life annuities as a foundation, and the other life income mandates to enjoy her bucket-list dreams and ongoing security.

Bill who personalized his pension can reduce investment risks, or access 7-to-10% guaranteed income in his 70s and beyond, by including life annuity strategies.

(Learn about guaranteed Life Income strategies - and high-income ladders - at Life Annuities:  Cinderella or Goldilocks?)

Results and Freedom of Life Income Mandates

If we can make it impossible to run out of money for the rest of your life, would this be a comfort?  If you would adjust spending to enjoy your dreams along the way, and also have plenty for later needs, do you see how “life income mandates” (fitted to your personal wealth plan) can prove highly valuable for you?

Enjoying your Life; sustaining your wealth; never being a financial burden to your children; these are worthy goals.  A certified financial plan can align your invested assets to fit your lifestyle and future spending.  What comforting protection for yourself and for the loved ones you hold dear!  So as we keep the whole picture in view, and amend for any needs along the way, you can freely focus on enjoying life's goals, pleasures and comforts through the seasons ahead.

[See companion article on Life Horizons Analysis which links life income
mandates to spending in early, mid- and later seasons of retirement living.]
 
Amazon or Kindle:   “A Lifetime Of Wealth — And How Not To Lose It.”
"Subscribe" -- see on this page -- to get upcoming insights and updates.

Ret.Coach SEALBrian Weatherdon, MA CFP CLU CPCA MDRT

905-637-3500 x 223.   brian@SovereignWealth.ca

10 comments

  1. This site was… how do I say it? Relevant!! Finally something which helped me. Appreciate it!

  2. whoah this blog is excellent i like reading your articles. Keep up the good work!

  3. Hi there, great job. I will personally recommend to my friends.
    I’m sure they’ll be benefited from this web site.

  4. Received by email, to share anonymously:

    “I was watching a news presentation the other night and they were talking about a couple with medical problems. The woman was 92 and bedridden and her husband at 88 was looking after her. The interesting part was that she had been a vice president of a large company during her career and he had done well in business as well. However, they indicated that they did not have the means of additional help on weekends and the husband was worn down. How is it that people who have done exceedingly well in life can be in this position?

    “So what does it mean for people like (us) in our middle-income bracket with only government medical assisstance as well as the younger generation that are having a very hard time of it? I begin to wonder what is happening when the majority of people work hard all of their lifes and end up in these types of situations. Recent news indicates that 86 people in Canada own or control 92% of the wealth. Maybe I am wrong but I think we are heading back to the have and have-not centuries when a few controlled everything? What do you think?”

  5. Dear “Red”,
    Your reflections are indeed very important. I wish more people would take notice of these things. Yes 86 households control or own nearly 90% of Canadian wealth — and the situation is increasingly similar in the US, UK, and other developed nations. Sad, and some will say an “evil” situation. Yet we must deal with reality as it is.

    So my focus on Life Income Mandates and the whole discussion on Guaranteed Income for Life, aim to preserve personal wellbeing & household income for today & future needs. Live life today. Preserve resources also that sustain income through future “horizons”. In a total-planning perspective, this is my vital and passionate goal.

  6. Nice blog )

  7. Thanks – magnificent.

  8. In his article, “Worried? Think like a Pension Fund” Guy Dixon offers this:
    “Investors should concern themselves less with market turbulence and instead focus on an asset mix that will fulfill their future income needs.” This indeed is our prime focus with “Life Income Mandates” … Dixon’s full article is at: https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20160127/SRRRSPRETIREOUTLOOK

  9. Speaking of DIVIDEND INCOME John Heinzl asked who predicted a stock market jump (or loss) last week and the point is that no one can do that. There’s < 1% chance of usefully predicting when stock markets will rise or fall by 10%, and quite often one finds perfectly good investments losing value for a period of months. But look at the DIVIDENDS which may even keep RISING regardless of anything happening in stock markets. If our dividends tend to rise year-over-year we generally find this accelerates our investment values too. It's worth taking some time to discuss how this works, and how we can combine global Real Estate, Infrastructure, Dividends, and Fixed-Income, to assure RISING INCOME over the years ahead.

  10. Lynn Biscott, author and financial planner, in her retiring words as a contributor to FORUM magazine (March 2016) offers further insight on what is a responsible withdrawal rate for retirement income. “While researchers have differed on the rate to be used, many seem to have settled on the formula of four per cent of the initial value of the portfolio, with future withdrawals adjusted for inflation.” But Lynn identifies a flaw, that “while the formula may ensure that clients don’t outlive their money, a significant number of them will die with far more in their portfolio than they started with.” My take on this is that we can consider a withdrawal nearer 6% if life-income mandates will secure that rate along with indexing for inflation. Ultimately the question we each want to answer is: “is this money for spending, or for bequest” …and our planning moves forward from the results of that question.

Leave a comment