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Planning Doesn’t End at Retirement - Accumulation vs. Distribution and How to Prepare Yourself for Them

For most of us, the idea of preparing for retirement centers around saving. You work hard to save and build up the value of your investment portfolios. You contribute dutifully to your 401k and IRAs, looking forward to the day when you leave the workforce behind. Officially reaching retirement is something to celebrate—and chances are you’ll be popping some champagne to do just that. 

But retirement planning doesn’t end on your last day of work. There are two major phases to the process—and retiring successfully involves preparing for them both. Read on to learn about the accumulation and distribution phases, and how to transition smoothly from one to the next. 

Accumulation Phase - Putting Aside Money for Retirement

The accumulation phase begins as soon as you begin working and putting aside money for your future retirement. Depending on when you start and stop working, the accumulation phase may last 30, 40, or even 50 years. 

The goal during this period is to amass a retirement fund large enough to support yourself, and potentially your spouse, for the remainder of your life span. 

In the accumulation phase, your financial planner helps you find ways to meet your retirement savings goals and maximize your investments and income streams. The number and types of savings vehicles a person may have varies based on individual circumstances. Here are a few common examples: 

  • Social Security - You pay into Social Security through funds automatically deducted from your paycheck. Begin recouping a reduced amount at age 62, or wait until full retirement age (67 for most people) to collect the full amount.  
  • 401(k) - A 401(k) is an employer-sponsored retirement savings plan that lets you funnel a portion of pre-tax income to the plan with each paycheck. 
  • Individual Retirement Accounts (IRAs) - Contributions to an IRA may be pre-tax or after-tax, depending on the type of account you choose (Traditional vs Roth). The amount you can invest varies based on your age, income, marital status, and the yearly contribution limits set by the IRS.
  • Investment portfolio - This includes any brokerage accounts holding investments such as stocks, bonds, REITs, mutual funds, and/or ETFs, as well as other investments such as real estate.
  • Annuities - Although some folks decide to use them, we generally don’t recommend including annuities in your retirement savings plan; here’s why
  • Life insurance policies - Some retirement savers choose to include life insurance policies, of which there are many different options to consider. 

Distribution Phase - Begin Drawing from Your Accumulated Income

The distribution phase begins when you stop working and are no longer receiving earned income. At this point, you’ll begin using the savings and investments built up during accumulation to support your lifestyle. 

If you’re like most people, you probably haven’t given much thought to the distribution phase. However, based on our decades of experience in financial planning, this phase tends to generate more stress and worry than the accumulation phase. The idea of spending money with no income coming in can be nerve wracking, bringing up questions like:

  • Did I save enough? 
  • What if we run out of money?
  • Can I really afford to take this trip or buy presents for my grandkids?
  • What happens if one of us gets sick? 
  • How long do my savings have to last?

These are all great questions. If you’ve been following pop culture news, you know that actress Betty White recently passed away, just shy of her 100th birthday. A week later we lost the great Sidney Poitier, at the ripe old age of 94. Thanks to modern medicine, this type of longevity is becoming more common. And while it’s nice to imagine you’ll be around longer, it can also cause anxiety from a retirement planning point of view. 

Unfortunately, no one has a crystal ball that will reveal how many years you’ll have post-career. As a result, many financial advisors recommend that you financially prepare to maintain an acceptable standard of living until at least 90. 

Planning for the distribution phase following retirement has many variables. And given that this phase may also span over a few decades, some of them may need to be revisited periodically throughout your retirement. 

  • Retirement income planning - Making sure your retirement income can fund your lifestyle includes strategic planning across multiple areas including Social Security benefits, required minimum distributions (RMDs) and more.
  • Investment portfolio planning - Portfolio planning takes into account the investor's goals and tolerance for risk, among other factors. A financial advisor helps you determine the investment mix and rate of return you need to meet your financial goals.
  • Tax planning - Without proper planning, taxes can quickly eat a big chunk of your retirement funds. With the help of a financial planner, you can withdraw your funds strategically to reduce the amount of taxes you pay. 
  • Risk management - This aspect of planning involves making sure you’re neither over or under-insured, taking into account your potential need for long-term care, life insurance, and navigating the complex Medicare landscape.  
  • Legacy planning - Legacy and estate planning means getting everything in order so that when the time comes, your final wishes may be carried out. This covers everything from beneficiaries to Last Will and Testament to Power of Attorney. 

Preparing You for a Successful and Fulfilling Retirement

At Wealth Legacy Institute, we take a holistic and personalized approach to retirement planning. That means helping you make strategic investment decisions based on your specific goals, lifestyle, and values. No matter which phase of retirement planning you’re in, our experienced financial advisors will help you create or adjust your financial plan for long-term success. 


Whether you’re thinking about retirement planning in Denver or elsewhere, this will help you set—and meet—your retirement goals. 

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