Operating a wealth management business since 1998, Michael Cano of Cano Wealth Strategies understands the importance of creating retirement income plans to allow individuals to retire with success.

Key to an individual considering retirement is understanding what their expenses will be, according to Cano. Determining what their lifestyle will look like and how much maintaining that lifestyle will cost them, and figuring out if they will continue to have enough money to pay for that, will be the determining factors of the ability to retire.

Investment and wealth management firms exist to help clients feel comfortable with their retirement incomes. Investment strategies vary from client to client, depending on things like income, savings, and the amount of risk individuals are willing to take. 

“Typically, the more money you have saved up, the less risk you need to take,” Cano said. “If you’re at a retirement age and you have less money saved, you may have to take a bit more risk to make sure you don’t run out of money in 15 to 20 years. We help people determine how to make the most of what they have so they can continue living their lifestyle throughout retirement.”

These types of firms also explore other financial avenues for their clients, including estate planning, inheritance planning, and determining charitable giving plans for preferred organizations. 

Retirees usually rely on Social Security as the most important part of their fixed income. People can generally feel comfortable knowing the money will show up for them each month, though the specific amount may increase year over year as well as may decrease with Medicare premiums. Other income streams can include pension plans, which offer a fixed dollar amount to be received for the entirety of one’s retirement.

“This is a big part of the puzzle for me,” Cano said. “We have to look at the expenses and determine if the income will offset those. We look at their available assets and determine if and when we need to change the level of risk for their investments to make sure retirees still have money as long as they may need it. I don’t like my retired clients to have to worry about what’s happening to their money because they’re not going back to work. What they have is what they have.”

Managing expectations is an important part of investment strategies. Some retirees may have a  large portfolio, but may panic in rough markets and make unfavorable decisions. Helping retirees understand their level of risk, when to allow markets to recover, or when to get more aggressive creates a need for cohesive planning and management to maintain comfort with their investments.

While many retirees put off certain large vacations or purchases until reaching retirement, the bulk of expenses in early retirement consists of daily living expenses. 

“I remember hearing a quote that upon retirement, people are going to need to earn 70% of what they did during their work life,” Cano said. “What I’m seeing, though, is that more than likely it needs to be at least 100% of what they were used to. They may shift the money used for commuting or buying lunch at work to other areas, but really, people get comfortable at a certain level of monthly income, and that’s what they’re striving for in retirement.”

In recent years, Cano has seen more people planning for retirement at a younger age. People want the ability to enjoy their life, and strive to reach retirement earlier than the generation before them. He has also seen people who have planned to retire at a certain age continue working in some capacity because a large portion of their social relationships are fostered at work. Also, some employers are extending incentives to older workers as fewer young workers are entering their workplace.

Helping retirees maintain financial comfort after their working years has additional benefits to the community. Successful retirement allows older adults to be more involved in the community. Cano has seen a large number of retirees working with WNC’s nonprofit organizations by volunteering and serving on boards, all with a mission to stay active and involved in helping the community.

“People entering retirement are used to being busy,” Cano said. “They have the ability to focus on the things they didn’t have time for when they were working. They are providing financial support, but it’s more than financial contributions. They also have time to spend.”