• Income Managment
• Income Allocation

Many people don't understand this concept. So, we're going to discuss it here.

Income management means different things in different contexts. But, as it pertains to families, it is the most useful strategy to learn. First, your income is like the revenue generated by a company. If you treat your personal income like revenue in a business, and treat your job as the sales, the expenses as your company budget, and think like a business owner, you'll start to understand better. A company puts money aside for long-term growth projects and invests in research and development. Are you investing in your development in the workforce? What about continued education? Could you earn more if you got a higher degree from an online or night college? What about a part-time career, or a total career change? As an example, many of our agents either currently have, or had in the past, a primary source of income but wanted to increase their family revenue. You can fund your retirement account, or get out of debt, at greater speed with extra income. There are many benefits of proactively managing your family income.

Managing revenue is just a part of income management. The other part of the concept, "income management", is about how you divide that income once it's in the door. How you budget it means retiring on time, with enough funds and a good game plan, or not. How you determine your budget largely depends upon how long you have before retirement, or how long you've been retired. Your transition into retirement, and your needs for a comfortable retirement, are unique to anyone else's. These diverse situations call for unique financial products and strategies. These solutions should evolve as your needs inevitably change over time.

These pie charts represent the needs you may have leading up to and throughout retirement.

Twenty-five years may seem like a long time until retirement, but these years coincide with the prime earning years, tempting people to spend more than they should.

Consider:

• Asset growth can be pursued.
• Some assets can be leveraged, allowing others to seek more aggressive growth.
• College and wedding expenses can erode retirement savings.

Seeking retirement income security while meeting current needs may seem like a balancing act. This may be complicated by the fact that needs change throughout a person's working life, requiring periodic reassessment of the individual's portfolio.

Consider:

• Protecting assets gains importance.
• Important decisions, such as early retirement should be discussed.
• Retirement savings may have been eroded from child educational expenses, weddings, etc.

What a retirement income portfolio looks like will be highly dependent on a person's retirement goals. This example is for someone who wants to volunteer, so they need to cover most of their basic expenses themselves. It might also work for someone who wants to start a business. The portfolio would not work for someone who desires to travel often, they would need higher Discretionary Expenses.

Consider:

• Volunteer or travel plans
• Remember long-term care is not covered under Medicare.
• Emergency funds should be set aside.
• If there is a desire to leave a legacy to family or charity, life insurance should be evaluated.

Many people just can't give up an active work life altogether. For someone who has decided to work as part of their retirement, a different portfolio would be required. Let's assume this retiree receives 40% of his income from Social Security and pension and 60% from a consulting business started shortly after retiring.

Consider:

• Continue having discretionary expenses to cover travel and entertainment.
• Fixed expenses can be reduced, if the house is paid off.
• Healthcare expenses may increase.
• Emergency expense fund should be evaluated.

As people get further into retirement, they begin to relax more and take things a little easier.

Consider:

• Discretionary expenses are reduced as life slows down.
• Fixed expenses become the biggest allocation.
• Focus more on healthcare expense budget.
• Forus more on emergency expense budget.