7 Best Retirement Planning Income in 2019
Gone are the years of the traditional pensions and 30+ years with one company.
Today, people need to be much more reliant on their own means of saving, investing, and planning.
It’s definitely a hard task when there is so much data out there, so many “wants” eating at your ability to save, and most importantly the know how on where to start.
With the decline of traditional pensions, many older workers and retirees face a “do it yourself” retirement: You’re on your own to figure out how to make your retirement savings last for the rest of your life.
With retirements that can extend 20 to 30 years or more, this is indeed a daunting challenge for those who are fortunate enough to accumulate significant savings by the time they retire.
To address this challenge, different thinking and new language is needed to transition from a mindset concerned with accumulating assets for retirement to a mindset concerned with generating income in retirement.
7 Common Goals for Retirement Planning
Here are common goals that you may have for constructing your retirement income portfolio:
- Generate a lifetime retirement income that you can’t outlive.
- Maximize the amount of retirement income you expect to be paid over your lifetime.
- Minimize the odds that your total retirement income will fall below an undesirable level, usually due to stock market crashes.
- Provide the potential for growth income to keep up with inflation.
- Maintain access to savings in case of unforeseen expenses, such as medical or long-term care.
- Preserve the ability to leave behind unused funds as a legacy.
- Select investments that are easy to use and don’t need continual monitoring and adjustment, or that protect you against fraud and mistakes (you’ll appreciate this goal when you reach your 80s and beyond).
7 Best Retirement Income Generators in 2019
Here are the common retirement income generators that have distinct characteristics regarding the above goals, each with different advantages and disadvantages:
- Drawing from Social Security.
- Investing your savings and using a systematic withdrawal plan to generate a retirement paycheck.
- Investing your savings and living off the interest and dividend income.
- Buying a guaranteed lifetime annuity from an insurance company (think of it as a personal pension).
- Generating money from real estate rental income.
- Getting a reverse mortgage.
10 Facts about Annuity for Retirement Planning Income
- Go the Annuity Route to Avoid Unpredictability
- Outside of a lifetime annuity (which eliminates flexibility), most retirement income plans are unpredictable.
- A large segment of retirees are seeking certainty. They worry about what might happen if they live too long, if financial markets collapse (thus killing any 4 percent draw down plan), if interest rates go up or down, or if dividends get cut.
- If you are concerned about unpredictability, then a lifetime annuity with inflation protection and spousal support is the way to go.
- And, you can now get pretty sophisticated with annuities.
- In years past, the alternative to riding out a bumpy stock market while trying to create a steady retirement income was to take the money out of the market and put it into an immediate annuity.
- The solution is an equity indexed annuity with a lifetime income benefit rider.
- This account functions similarly to any other type of investment or deposit account, in which the investor retains full control over the investment, but it also provides for an income guaranteed by the annuity company to last at least as long as the client does. This eliminates longevity risk for the client, and creates a level of confidence in their ability to retire which is unavailable in mostly any other investment.
- With the proper education, most investors find this option easy to understand, and “consider it to be a no brainer.
- Proper use of the index annuity represents the best modern theory of retirement income creation.
The Best Retirement Planning in 2019
No retirement income plan, no matter how sophisticated or comprehensive, can predict all the twists and turns you may encounter during a long retirement.
But if you start with a solid plan and stand ready to refine it and make appropriate adjustments as you go along, you’ll reduce your chances of outliving your savings and boost your odds of having a secure and rewarding post-career life.
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