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Turning Assets Into Retirement Income
The transition into retirement requires a major change in the way people think about and manage their money.
Today´s retirees are less likely to collect a pension, and who knows what will happen with Social Security? Along with longer life expectancies and inflation, there is much to consider when planning for your future.
Planning Starts With Some Important Questions
- How many years might you spend in retirement?
- What´s the right amount of income to withdraw from your portfolio each year?
- How is your money currently invested?
- Is your plan too aggressive or too conservative?
- Does your investment mix suit your risk tolerance?
- Have you thoroughly explored your future income needs?
- How much of your retirement income are you willing to leave unprotected in exchange for potentially higher returns?
- How much of your retirement income do you want to come from guaranteed* sources?
Once you´ve answered these questions, you and your representative can put together a plan to help ensure your retirement income will last as long as you do.
The Three Fundamentals of Retirement Planning
1. Timing Your Retirement
The single most important retirement planning decision you will make is determining when to stop working.
For the vast majority of Americans, a strictly financial evaluation of their retirement readiness will reveal the overwhelming advantages of remaining in the workforce for a few more years.
2. Understanding Withdrawal Rates
Retirees must also determine how much money to take from their investment portfolios as periodic retirement income.
The annual rate of withdrawal can dramatically raise or lower the prospects of your portfolio. The chart below shows how an initial nest egg of $1 million could be exhausted within 20 years if funds were withdrawn at 6%. By withdrawing just 2% less per year, your savings can last years longer.
3. Creating a Portfolio With Guarantees
Most retirees and near retirees will likely receive at least minimal Social Security benefits for the foreseeable future. You might also expect some kind of fixed income stream from a corporate pension, IRA or other private sources. However, after that, you´re on your own.
To keep pace with inflation and rising healthcare costs, it is essential to plan for supplemental guaranteed retirement income.
Talk To Your Representative
Take advantage of the expertise of a knowledgeable representative who can show you how to invest your money in products with options that guarantee a steady stream of retirement income over a period of years—and even for life!