Financial Literacy

Understanding the Value of an Income Plan

Risk levels are key

Many financial plans focus on putting money away for retirement, as well as reducing the investor’s tax burden. However, some plans ignore the need to create income for the future, often relying on savings and investments to do the heavy lifting. Without regular income during retirement, the client’s funds will shrink as they withdraw funds to live. A well-designed financial plan should include an income plan that provides a regular monthly income stream to support the client’s lifestyle during their retired years.

“Income plans are vital because most people don’t have pensions to rely on during their retired years,” said Philip Statler, EA, president of Statler Financial Services Inc. “Many clients are incredibly fearful of running out of money later in life. An income plan will ensure that this does not happen.”

Everyone has varying financial needs, and numerous factors will affect the creation of their financial plan. The same is true for the income plan. Clients retire at different ages and will have different financial requirements, so it is essential to build an income plan that fits into that scenario. Statler follows the prudent investor rule, which looks at each investment to determine whether it is prudent or not within the context of the whole portfolio. He also applies the Rule of 100 – which subtracts the investor’s age from 100 to find the percentage for stocks – to help with managing risk.

“We assess the client’s risk level using different tools to ensure that their portfolio matches up with that number,” said Statler. “We will often compare their existing portfolio to one that we would have created from scratch given their particular circumstances, and then examine where there are differences.”

statler quote550x400Given that people are living longer today, often into their 90s and beyond, the income plan is even more essential to protecting their financial future. Longevity must be considered when designing a financial plan, and the income plan should consider retirements lasting more than 30 years. This plan must also weigh the effects of inflation, which will change and fluctuate over the client’s lifetime.

With people living longer, the income plan is effective for helping clients to deal with aging parents who could run out of money if they have not planned properly, as well as address their long-term care needs. People within the sandwich generation can struggle with financially supporting both their parents and children. They can also find themselves unable to save for their own retirement. Statler suggests that clients make the most use of various investment tools, like the 401k, so that they don’t leave money on the table and also take advantage of all opportunities to reduce their tax burden.

“I have extensive and current knowledge of tax laws, and will make sure that I take advantage of any tax-saving opportunities when developing a client’s income plan,” said Statler. “I make sure that every client has a written plan that will provide the income they need before they enter retirement.”

For more information on Statler Financial Services Inc., visit:

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change and do not constitute personalized investment advice. A professional advisor should be consulted before implementing any investment strategy. No content should be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell any securities mentioned herein.

Statler Financial Services, Inc. is registered as an investment advisor with the States of Florida, New Jersey and Pennsylvania and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment advisor does not constitute an endorsement of the firm by any state regulator nor does it indicate that the advisor has attained a particular level of skill or ability. Statler Financial Services, Inc. does not represent, warranty, or imply that the services or methods of analysis employed by the Firm can or will predict future results, successfully identify market tops or bottoms, or insulate clients from losses due to market corrections or declines.

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