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This ‘fruit pyramid’ can help you build the retirement that’s right for you

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Jim DeGaetano

This article is reprinted by permission from  .

Over the years, I have had thousands of meetings with people about their pending retirements. I’ve listened to their hopes and dreams, in addition to concerns and worries, regarding one of the biggest transitions they will face. And I’ve noticed something: of all the subjects and life skills we’ve learned in school, retirement was never one of them. 

This inspired me to design a simple model to help people understand their retirement options for a healthy fiscal future. It’s all about fruit.

Remember the government’s food pyramid? That’s the nutrition model we learned in grade school to guide us in healthy eating habits. Grains are at the base of the pyramid, requiring the greatest number of servings, followed by fruits and vegetables, then dairy, meat and poultry, and at the very top are sweets and fatty foods, requiring the least number of servings.

The food pyramid adapted to your retirement

There’s a reason why this model worked and is still remembered today. Most of us are visual learners. That’s why I adapted the food pyramid for a “fruitful retirement,” casting people as either apples, pears or strawberries when it comes to their retirement.

Each piece of fruit represents a type of retirement situation with an associated strategy to mitigate its inherent risks. Once you know which fruit you are, you can customize your plan to suit your situation.  

Also see: Planning for retirement? You should also plan for inflation

Rather than focusing on accumulating money for possessions, this process focuses on creating the kind of life you want to live after employment.

Needs, Wants, and Legacy

Imagine a pyramid that’s a retirement triangle. Much like the food pyramid, it’s broken down into three sections. But here, the sections are expenses: Needs, Wants and Legacy.

The base of this pyramid is the foundation representing our Needs — the items necessary to our existence, such as food, shelter, utilities and health care.    

The middle represents our Wants — items that satisfy our human desire to entertain, have fun, travel, explore and connect with others through hobbies, sports or the arts. When calculating your Wants, think about your spending during a non-pandemic shutdown scenario.

The top tiny triangle of our pyramid represents our Legacy. It is what we intend to pass onto our family, house of worship, charity or other cause while we are living or after we have died. 

Read : Here are the average retirement savings by age: Is it enough?

Once you understand this retirement triangle, you can easily determine your ‘“fruit” relating to it.

Pears are widest at the bottom (Needs), Apples widest in the middle (Wants) and Strawberries are widest at the top (Legacy).  Your  fruit is determined by the area of the retirement triangle where your income stream falls short.

Pears

If your income sources such as Social Security and any pensions or retirement savings don’t cover your Needs, you are a Pear, since your income shortfall is at the lowest level of the pyramid. 

Pears must focus on providing guaranteed income sources to match necessary expenses. Annuities from insurance companies can offer a way to guarantee income, either for life or a predetermined number of years. It’s helpful to work with a financial professional in choosing one.

Pears may also want to consider working longer either in a full-time or part-time capacity to raise their Social Security income, which is based on their earnings. This will also add more time to save money and mean fewer years to withdraw your retirement savings. 

Pears should seriously consider analyzing their planned retirement date and expenses in relation to the long-term sustainability of their plan.

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