Income growth is the key to successfully managing an income stream that meets your daily needs.
Too much emphasis on a static asset allocation that ignores income allocation is bound to fail.
Traditional asset allocation promoted by major wirehouses and certain financial planners is based on historical rates of return or more accurately total rates of return.
Retirees need income that grows. They don’t need to speculate with guesses about the future direction of major asset classes.
In a low-rate environment, retirees need to look beyond a single asset class to meet their retirement income needs.
Alternative assets, foreign currencies, equities, real assets and fixed income – is the only strategy that will ensure capital preservation, income generation and inflation protection.
By using income asset allocation across the five asset classes, retirees can receive income that preserves their capital by providing long-term growth in income and high yields relative to more traditional retiree asset classes such as bank deposits.
A focus on generating sustainable income growth through a multi-asset approach will better meet the longevity risk challenge that all baby boomer retirees face.