I often poke fun at CPAs and Tax Consultants whose stock answer is, “It depends,” when asked about a tax credit or strategy to minimize tax liability. However, when I’m asked about how much one should save for retirement, how much insurance should they get, or if they should save to their 401(k) or Roth 401(k), I frequently say, “It depends on your financial plan.” But how do you come up with the plan? What is it, and where do you get one?

A financial plan comes from you. It is never too early nor too late to develop a plan. I generally recommend a comprehensive planning strategy called the Ten Year Rule: Any money you need within 10 years should be invested in fixed-income securities. Any money that you will not need within 10 years should be invested in high-quality, individual common stocks or mutual funds that invest in common stocks.

Those who are living off their investments using the Ten Year Rule understand they are not pressured to sell investments when the market is down because they have 10 years of uninterrupted cash flow provided by the fixed-income portion of their portfolio. The 10 years of liquidity is also a rolling 10-year period. In 2019, you should be planning for your liquidity needs in 2029. The goal of the fixed-investment portion of your portfolio is to keep up with inflation to protect your purchasing power. If stocks are down, you have the ability to wait for the market to recover. Once the market recovers, you can then begin to replenish money withdrawn from the fixed-income side.

Your financial plan should take you from your present situation to where you want to be. To start, you will need to project your cash flow for future years to determine when you will need to draw upon the assets in your portfolio. You should consider your life expectancy, current income, savings, taxes, and most importantly, spending. Your cash flow projections can help you determine if you need to make changes, so you may achieve your goals. You may consider looking at several different scenarios using different variables like higher inflation, anticipated market return, or different retirement date.

Once you pick a scenario that you are most comfortable with, apply the Ten Year Rule by purchasing fixed-income securities to cover known liquidity needs. If you know you’ll be retiring in 2029 and you’ve estimated that you’ll need to pull money from your investments to pay for living expenses, you should begin moving assets into fixed-income investments that mature around the same time you need the money. Any remaining assets should be invested in the stock market for growth.

You should revisit your financial plan every few years. Goals may change, life events may derail your plan, or you may just need to know if you are on track to meet your goals. The economy—something you cannot predict—may also change how you feel about your plan. Ideally, having a plan in place keeps you on a steady path so that you do not overreact to market events or hype.

If you can, it is beneficial to sit with a financial adviser who can guide you through the process of organizing your finances for retirement—it is not as scary as going at it alone. Furthermore, you’ll develop a plan that is customized to your needs and goals.

William G. Lako, Jr., CFP®, is an Executive in Residence at Kennesaw State University’s Coles College of Business and a principal at Henssler Financial and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Saturdays at 10 a.m. on AM 920 The Answer. Mr. Lako is a CERTIFIED FINANCIAL PLANNER™ professional.

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