ALERT! Investors Are SHOCKED When Faced With the Price Tag of Retirement
July 8, 2022
Bottom Line: The amount of income you can generate now may not be enough to support a comfortable retirement.
Even the most disciplined investors may be in for a shock when faced with the price tag of a comfortable retirement. That’s because the future will most likely be a more expensive place — and you may be spending much more time there.
This means your retirement income could have trouble keeping up.
What’s driving this situation?
Longevity: The good news is that people are living longer. The bad news is that many distribution strategies are based on more compressed timelines.
Inflation: You only need to look at the prices of 30 years ago to see that inflation is real. And in areas like health care, costs have been growing at nearly double the rate of core inflation.
*Source: Actuaries Longevity Illustrator. †Source: Federal Reserve Bank of St. Louis.
In short, it can be a challenge to secure a dependable and consistent retirement.
Even if you have built a diversified retirement plan that includes savings and investments, that money can be affected by market fluctuations.
With all that being said….
How will you pay for tomorrow?
Here are some considerations when planning for your retirement income.
Determine your retirement spending needs.
To financially plan for retirement income, consider how much money you’ll be spending once you leave the workforce. Having realistic expectations about your retirement costs, spending habits, and income can help you navigate your financial life in retirement. Some points to ponder include:
What are your estimated costs for your planned retirement activities such as travel, unexpected expenses, and medical costs?
What is the status of your investment portfolio and retirement accounts? When you retire, you will be making a switch from saving to spending. Will assets have some growth potential due to inflation? You may also consider minimizing investment risk to better protect your portfolio.
What is your expected income during retirement? This may include Social Security, pensions, annuities, money from a part-time job, or income from a rental property you may own.
How long will your savings last? You may outlive your savings, so factor in that possibility to help prevent the well from running dry.
Consider purchasing a fixed index annuity
One type of financial product that can help you secure retirement income is a Fixed Index Annuity (FIA). An FIA is an insurance contract that provides you with income payments in retirement. It is designed for long-term goals like retirement because your interest payments are based on the performance of a stock market index. However, unlike owning stocks, FIAs offer protection against market loss and downturns and are not a direct investment in the stock market.1 Along with premium protection, FIAs also offer the opportunity for growth that may help guarantee you have a stream of income payments for as long as you live.
See for yourself how we can help you answer three key questions:
1)How can you minimize the risk of running out of money? By increasing the income potential of your portfolio, chances are you’ll be able to enjoy retirement on your terms, on your timetable.
2)How can you protect your portfolio’s principal? Greater income production may allow you to reduce the amount of principal you need to draw on, keeping more of your assets working for the future.
3)How can you get clarity on the life you can afford in retirement? A more robust income outlook will allow you to plan more thoroughly for how you want to live and what you want to do — for however long that is.
Bottom line: When it comes to helping you figure out how to pay for tomorrow, we’re ready to help you. Today.
