Just as the second half of a game is more important to winning than the first, getting income planning right in retirement is critical to success.

Similar to preparing for an important game, you need to prepare for retirement by adapting the best strategy for your circumstances. Here are some thoughts to keep in mind when reviewing your current or future retirement income planning. Most people will need the assistance of a qualified financial planner to assist them in developing a comprehensive plan.

Having a detailed plan in place will give you peace of mind. You will have planned for adequate cash to be available to ride out the low spots in the markets, avoiding the need to "sell low". This is critically important in income distribution as having to sell assets at the wrong time is a double whammy. When selling low, to obtain the amount needed, you need to sell more shares, at a lower price- dollar averaging in reverse! As part of your planning, you will also have established a spending plan, considering many factors such as inflation and changes that may occur as we grow older. Such as, health care costs that are rising at a faster rate than average prices and the increasing need for additional care. Have you considered increasing property taxes, income tax rates and property insurance? Finally, you will continue to plan for some growth to overcome the effects of inflation. While no one cannot assure that all situations will be covered, a disciplined approach will have a greater chance of success.

Once you have a spending plan, income sources such as pension plans, social security and annuities are added to determine if there is a gap between the required and available income. If there is, you need to look at your available assets and goals to determine a safe withdrawal rate. There are many factors to consider such as your age, activities, health, risk tolerance, legacy plans, desire to assist family members and charitable wishes. A detailed analysis of your situation is performed to assure that the planned withdrawal rate has a high probability of supporting you through your lifetime. If this is not possible, options are considered to improve the plan.

A plan to use investment assets to fund cash needs in a tax favored way is developed next. This plan must also assure that there are sufficient cash reserves to avoid selling during market lows. Secure income can be developed by using annuities, bonds, CDs or similar fixed income stream investments. Investments that generate dividends assure a second income stream while maintaining a growth component. These are vitally important to assuring that your assets will grow and last your lifetime. Some options include high dividend yielding stocks, preferred stocks and REITs. The other element in the mix is a varying amount of growth assets. Portfolio rebalancing is based upon specific income, cash reserve, asset class ratios and growth targets. This meets the goals of having a secure portfolio that will provide steady income, cash reserves and growth to reduce the impact of inflation.

The best time to develop this plan is several years before you want to start generating income from your assets. However, it is beneficial to review your current income distribution plan and use these concepts to make improvements. It is never too late to start training for the second half of the game!