section 1 - The American College Online Learning Center

. Other sources of retirement income(1) Supplemental nonqualified employer sponsored benefits(2) Income from rental property or renting out part of their home(3) Income from selling a business(4) Being paid commission may create a stream of income into retirement(5) Part-time employment(6) A good software program can consider the duration and amount of eachstream of incomec. Identify less obvious assets(1) Cash value life insurance(2) Home equity(a) Can be difficult to deal with, but it can provide emergency funds.(3) Collectibles(4) Move into vacation home and sell primary residence(5) Limit the list to those items that are likely to be used to generate retirementincome5. Make a preliminary calculation of the client’s preparedness for retirementa. Software outputs depend upon:(1) What the software is modeling(a) Monte Carlo probability analysis has become common(b) But the client or advisor may not fully understand what the resultsmean and how they were derived.(2) Assumptions used about rate or return, longevity, inflation, etc.(a) Assumptions need to be reasonable and appropriate for eachspecific client.6. Develop strategies for addressing a retirement income shortfalla. Strategies that may eliminate shortfall(1) Saving more(2) Getting better performance out of the portfolio(3) Working full-time longer(4) Working part-time in retirement(5) Deciding to live on lessb. Telling the client that they are not prepared to meet their goals is a difficultconversation.(1) Solving the problems before or in early retirement is much less painfulthan discovering the problem later.(2) It is almost impossible to solve financial problems at age 90, but there arestill options at age 60 or 657. Consider legal and tax issues that can derail the plan.a. Tax strategies to improve a client’s financial situation1.13