How does Tri-O Retirement Plan work?
- SAVINGS. Savings is the key. Tri-O Retirement Plan enforces a model to automate the saving discipline throughout the accumulation phase.
- RESERVES. We should only keep enough liquid assets or cash in our RESERVES “O” and invest the rest. Inflation is the biggest enemy to having enough money during retirement. Only Investment in risk assets can help beat inflation.
- INVESTMENTS. Create two separate portfolios in the INVESTMENT “O” – An income portfolio and a growth portfolio. As the names imply, an income portfolio provides regular income to fund retirement and a growth portfolio is supposed to help us beat inflation over the long term. For the income portfolio, diversify across asset classes (dividend paying equity, bonds, REITs, real estate etc) and time (using dollar cost averaging). For the growth portfolio, invest in high growth sectors that will outperform the market in the long run. In the decumulation phase, regular dividends from the income portfolio take care of expenses. The growth portfolio will continue to help grow and beat inflation. Assets from the growth portfolio can be converted to the income portfolio at specific milestones during the decumulation phase to increase the regular dividends from the income portfolio.
Lastly, Tri-O Retirement Plan is less concerned about calculating a MAGIC NUMBER to determine whether one is ready to retire. It focuses more on what needs to be done during the accumulation and decumulation phases.
TRI-O RETIREMENT PLAN is a simple way to help you get started on your retirement planning. Learn the FUNDAMENTALS and HOW TO GET STARTED. There is also a spreadsheet to help you CALCULATE your monthly savings and your project monthly income at retirement. You can check out our BLOGS on topics pertaining to retirement planning. Feel free to CONTACT US if you have any questions or comments.
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