Safety delineates all aspects of life and hence, should be carefully reflected upon in your financial plans as well. Same is the case with the safety-first retirement planning. The approach is driven towards safeguarding your financial and economic life before considering post-retirement luxuries like travel, etc. In other words, it focuses on the essentials. Let\u2019s get to know more about this concept in detail: Why Adopt a Safety-First Plan? The safety-first approach works wonders as it operates against the norms of a safe withdrawal rate in a volatile portfolio. It demystifies myths of safe withdrawals. Since a withdrawal is based on variables like return rates, inflation, life expectancy, and so on, it is hard to guarantee safety. When you think of retirement, your mind automatically shifts towards the thought process of large investments with high returns. You start thinking of ways to maximize your bank balance or to keep it in good condition by investing more in volatile assets. Failing to consider your regular living expenses in these calculations is a trap that many people tend to fall into. But when you retire, the total savings might not be as important as your monthly income. The main emphasis of a retirement plan is not to focus primarily on buying additional assets, but to cover the fundamentals on the basis of the market movement. In other words, it is important to secure a regular monthly income first, and then look towards investing further. A safety-first approach takes into account additional upside risks. It also helps in deciding whether one should opt for volatile assets or save more to cover regular expenses. The strategy is also eminent because you are left with little margin of error after retirement. Assets like stocks, bonds, and mutual funds may seem profitable but may not be adequate to cover your basic retirement expenses. Hence, giving thought to regularization and strengthening your regular investment returns can ensure safety in the future. Creating a Safety-First Retirement Plan The safety-first retirement plan works on the principle of establishing risk elimination as the foremost essential need to cope up with the market environment. This secures your progress, regardless of the volatility of the market. The initial step is to prepare a stagnant plan that assures regular income to cover expenses of the retirement. Various factors like social security, pension, and other investable instruments are taken into consideration here. After building the platform for safer investments, the next step is to optimize the rest of the portfolio. In this step, you need to evaluate and measure risk, with the standards of the market. Different risk types and degrees are monitored and implied in investment assets. After eluding the risk and expenses, a guaranteed income is estimated. This sum of money is then evaluated and rated to be sufficient or insufficient after retirement. Prioritizing assets is the next and the last step of the plan. Funding Priorities Prioritizing your essential needs remains a cornerstone of safety-first retirement planning. Since the asset risks and goals are taken into consideration, wiser prioritization drives better decisions in the overall process. When you start spending without thinking about saving, the marginal value of assets starts declining. Expenses on luxuries such as vacations, which can be easily ignored, give way to speedy draining of funds. In contrast to this, spending on basic needs after retirement offers way more value. While planning to spend in a balanced manner can avoid overspending, spending only on rudimentary essentials can be a more composed plan with maximized returns. Coming back to the priorities, basic daily needs like food, shelter, electricity, etc. come at the top of the list. What trails next are the contingency funds. The subsequent priority is the discretionary expense funds that may be used for luxury purchases. The last asset is the legacy funds, which should never be taken for granted, but can be utilized to fulfill your dreams after retirement. Keep in mind that discretionary and legacy funds will only be prioritized if a secure funding source is applied in the retirement savings plan. Safety-First v\/s Probability-First Another popular approach that is taking over the investing world nowadays is the probability-first approach. This takes into account, discretionary expenses first and basic needs later. It is sometimes referred to as the process of \u2018making dreams come true\u2019, an idea that appeals to many individuals. But the method can drain more funds than bringing in any returns. Alternatively, the safety-first approach combines basic ethics such as social security, or bond annuity income to fulfill the basic needs of the retirees. Anything left is then categorized into discretionary funds. The practicality and genuineness of this approach helps investors to stay closer to the truth rather than developing false acquisitions. The concept helps in tying the knots between liabilities and assets. It advocates retirees to use the guaranteed income for investing in annuities or bonds that assure safe returns. Thereafter, a lump-sum investment can be converted into a small, yet regular monthly income that might even last your entire life. Through this, you do not need anyone to predict the duration of your retirement or nest egg savings. This shows that the approach is practical and functional for a number of reasons. To Sum it Up The way you plan your financial resources usually decides how secure your post-retirement life can be. If you look at the bigger picture, you will realize that working on basic needs holds a more important place in your plans, than saving up for leisure expenses. The ultimate purpose of investing and saving in retirement planning is to use funds wisely during retirement. When you evaluate things, you will realize that the basic needs of you and your family, are far more precious than fulfilling a few expensive wishes. It is hard to start anew in retirement, which is why a safety-first approach from the beginning can be an effective way to prepare for the future.