When it comes to estimating retirement income needs, there are a plethora of methods to determine the exact amounts that clients will need to save on an annual basis to reach their retirement goals. It’s easy to get caught up in the exact numbers and lose sight of the most important aspect to retirement: the income stream.
Having a substantial retirement portfolio and owning a home can be huge accomplishments that clients can tick off their retirement to-do lists, but losing focus on the value of cash flow, particularly once in retirement, can be detrimental. While having an end goal and a specific amount calculated for retirement planning can help provide clarity, the real goal of retirement planning should be to create an income stream that a client simply cannot outlive, reported Kiplinger.
An income stream in retirement can be derived from a variety of sources, including Social Security, real estate, investment portfolios, and retirement plans. In a rising rate environment alongside inflation and quantitative tightening, investors are seeing their portfolios particularly challenged, and financial advisors should anticipate questions from their clients regarding both their investments and the security of their income streams looking ahead.
Financial advisors should expect to be able to answer client-specific questions regarding the factors that can reduce or negatively impact their income streams going into retirement, how their portfolios and income streams are affected by bear markets or downward movements by markets, and the impacts of tax rates on both portfolios and income streams.
In a challenging market environment, many investors are seeing their income streams and buying power reduced as inflation continues to soar. For many, the focus has shifted from maximizing income generation to protecting assets and income streams in a difficult and volatile market environment.
Nationwide offers a suite of actively managed ETFs within equities for financial advisors. These funds include the Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI), the Nationwide S&P 500 Risk-Managed Income ETF (NSPI), the Nationwide Dow Jones Risk-Managed Income ETF (NDJI), and the Nationwide Russell 2000 Risk-Managed Income ETF (NTKI).
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