An Investor’s Guide to Transitioning Your Money — and Your Mindset — to Retirement

The transition to retirement after years in the workplace, as welcome as it may be, can also be jolting and even downright daunting, for all the changes it brings to a person’s day-to-day lifestyle, to their state-of-mind and to the handling of their finances.

A key part of the shift into retirement mode, explains Michael Palazzolo, a Certified Financial Planner™ who heads Birmingham, MI-based Fintentional, is adjusting from a growth-focused approach to asset-management and investing, to an approach which recognizes that protecting assets from downside risk and volatility is as important as growing them. Successfully transitioning to retirement entails not only a shift in investing mindset, but also an actual shift in how assets are invested.

And that may raise some potentially unsettling questions: Will the assets I’ve worked so hard to build last as long as I need them to, and are they adequately protected from potentially damaging swings in the financial markets? Will the sources I’m relying on for income provide enough to live the lifestyle I desire?

Questions like these can make the move into retirement “quite intimidating,” Palazzolo acknowledges. “It brings up a lot of emotions and for some people, a lot of fear.”

One way to find answers to these questions and defuse some of the anxiety that often accompanies retirement is by planning in advance for how to execute the shift from accumulation mode, where growing assets usually is top priority, to distribution or decumulation mode, where the focus is balancing growth with protection to ensure those assets are distributed efficiently to supply an adequate amount of income throughout retirement.

Here’s a look at some of the key steps involved in the accumulation-to-distribution transition and planning process:
Read More