A Blueprint For Targeting Desired Retirement Outcomes


Our Mission

BNY Mellon is steadfast in our commitment to helping you achieve your targeted retirement outcomes. We understand the retirement issues you face, and it is critical that our solutions address these unprecedented needs.

The retirement landscape is now more challenging than ever — made so by continued aftershocks of the Global Financial Crisis, dwindling government benefits and a daunting, privately funded retirement system. These factors in addition to the normal changes of life have made retiring intimidating to even the savviest of people. Our mission is to make the road less arduous — to improve the way you retire with the expert guidance of experienced financial professionals and an array of tailored insights, programs, tools and products.

We strongly believe that you should actively choose how you will spend retirement, and this may be achieved through astute planning. We advocate working with financial advisors and taking a three-step approach to plan your desired retirement outcome. The first is setting realistic retirement targets. The second, developing a budget to lay the groundwork. The final and perhaps most critical part is designing a course of action that involves four key financial behaviors: Earning, Spending, Investing and Insuring (ESII).TM

The four behaviors take into account that life happens and regular reprioritizations are necessary to keep your retirement targets in sight.

The framework helps you understand how your everyday decisions directly impact your retirement outcome and provide you structure so that investing in your future is practical and effective.

Guiding Principles to Targeting Successful Retirement Outcomes

We believe retirement success begins with targeting a desired outcome.

We define a successful retirement outcome as achieving income sufficient to sustain and protect your desired retirement lifestyle plus legacy goals. For many, this means having the financial security and ability in retirement to:

  • Meet day-to-day living expenses
  • Make personal lifestyle choices about where and how to live, and enjoy hobbies and personal pursuits
  • Maintain quality of life, personal health and independence
  • Leave residual assets for heirs and achieve philanthropic goals

Only with a target in mind can you properly plan and sequence the steps necessary to achieve the desired outcome.

Most individuals have a vague idea of how they want to live during retirement and usually require some guidance to sharpen that picture and set clear and definable goals. Financial advisors can help establish practical and achievable retirement outcomes by getting clients to spend quality time thinking about their future and answering the following questions:

Reverse Planning – The Roadmap to Retirement

Once you have established a targeted retirement outcome, the next step for financial advisors is to help you design a plan that maps out a clear route to wealth building and desired retirement outcomes. One of the most effective methods advisors can use is reverse planning, which starts with the retirement outcome and then builds a budget by working backwards. Reverse planning quantifies the cost of retirement in terms of annual expenses, then projects them over your retirement life expectancy, and solves for the gap between your retirement income and expenses.

You can work with a financial advisor to first calculate what retirement will cost initially and annually. Your advisor can help determine what guaranteed sources of income can be expected from Social Security, pensions and annuities, and subtract the guaranteed annual income from the expenses to calculate the funding gap. The advisor then determines the value of assets that will be required to generate sustainable income to close the gap. That asset value is the target necessary to achieve the desired retirement outcome.

Getting to Retirement

Retirement is a journey, not a destination.

How you live today dictates how you will live in retirement. Our financial professionals can help you navigate to your desired retirement outcome by focusing on four fundamental interconnected financial behaviors: Earning, Spending, Investing and Insuring.

This four behaviors concept is beautiful in its simplicity. For the most part, you know you must earn income in order to spend. And you must spend in order to provide for your needs and wants. What you may be less familiar with is the extent to which you must invest prudently to spend more and work less in the future. And you need to insure your earnings, assets and health against unforeseen events that could derail your retirement plans. It is through professional advice that you can come to understand the interplay of these four behaviors and take action to holistically manage them.


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Prioritize and Reprioritize to Help Achieve Your Goals


Prioritizing your short- and long-term financial goals is critical to establishing and maintaining the earning, spending, investing and insuring balance. The retirement pyramid below illustrates what goals you should focus on first by stacking them in order of importance.

The fundamental needs form the base of the pyramid with the most important goals, including housing, food, medical insurance, pension, annuities and long-term care.

Contingencies, the next level, means creating a rainy day account or emergency fund.

The third level revolves around significant life events — getting married, having children, buying a house, furthering education, transitioning into retirement, etc.

Lifestyle choices include vacations and luxuries.

The peak of the pyramid, legacy, focuses on wealth transfer.

The four behaviors structure—Earning, Spending, Investing and Insuring—is flexible to adjust when life throws you curves, such as a divorce, an unexpected long-term illness or a family member’s death, and keeps your focus on achieving your targeted retirement outcome.


Earning and spending behaviors also shift depending on where you are in your life cycle. For example, life insurance for a new parent is both highly important and immediate. For an older person, retirement savings and long-term care are also highly important and immediate. A home renovation project has relatively lower importance and moderate immediacy.

Prioritizing Life's Expenses and Goals Over Time

For illustrative purposes only. Every individual will have his or her own set and ranking of priorities. Priorities will evolve over time.

Invest with Goals

Goals-based investing is based on behavioral finance studies where individuals use mental accounting to imagine separate buckets of money dedicated to specific goals.

Goals-based investing capitalizes on mental accounting to make saving and investing easier — by breaking life’s savings goals into achievable sub-plans that aggregate to an overall investment and income portfolio. That portfolio accumulates during the working years and becomes a source of income through retirement.

Goals-based Portfolios

Each individual has his or her own set and ranking of priorities. Priorities will evolve over time.

Putting it All Together

We believe you are better served working with a financial advisor who can help you develop a plan for your targeted retirement outcome. Advisors can help quantify your target in terms of 1) more reliable sources of income such as Social Security, pensions and annuities and 2) a total asset portfolio needed to provide additional retirement income and funds for legacy and other goals. You and your advisor can then use reverse planning to develop a purpose-driven portfolio and a plan that flexibly integrates your earning, spending habits, investments and appropriate insurance to protect against life’s unexpected events that could otherwise derail a well-lived plan.

Purpose-Driven Portfolios Aggregate to Create the Total Portfolio

Different goals have different time horizons allowing for different levels of investment risk.

This information is general in nature and not intended to constitute tax or estate-planning advice. Please consult your tax or estate-planning advisor for more detailed information on these issues and advice on your specific situation.

BNY Mellon Retirement personnel act as registered representatives of MBSC Securities Corporation (a registered broker-dealer) to offer securities, and act as officers of The Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds as well as to offer separate accounts managed by BNY Mellon Investment Management firms.

BNY Mellon Investment Management is one of the world’s leading investment management organizations, and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management service and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular investment, strategy, investment manager or account arrangement. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. The Dreyfus Corporation and MBSC Securities Corporation are subsidiaries of BNY Mellon. ©2017 MBSC Securities Corporation, 225 Liberty Street, 19th Fl., New York, NY 10281.