There are ways to secure retirement income that allows you to maintain your living standard, live a lifetime, adapt to life events, and leave a legacy for your children even in difficult times.
When it comes to securing a lifelong income for retirement, investors who have lately suffered a severe market loss struggle to find peace of mind, don’t give up; it is possible.
Significantly, peace of mind depends on more than a large sum of money. Consider a self-taught money manager who was fortunate enough to convert 80% of his assets to cash in 2021. In addition to boasting about his money management talents, he offers them to his friends and family.
Nonetheless, these Baby Boomers are not as wealthy, are a bit older, and because they did not convert to cash, they have suffered a significant market loss. Now, in addition to losing a considerable chunk of their retirement assets, they have a new worry: Will they have enough income to sustain their standard of living for the remainder of their life?
Let’s examine a comprehensive retirement plan’s attributes, not just the numbers.
How to Obtain a Retirement Income for Life
In the early stages of retirement, whether you quit working or are working part-time, you need a sufficient income to accommodate this significant transition. Ideally, your strategy would be straightforward so that you know your source of revenue. Planning was much simpler when retirees received a pension in addition to Social Security. (And tax preparation was much more straightforward.) Most retirees and those nearing retirement require a retirement income plan; annuity payments provide a portion of the pension’s guaranteed lifetime income.
Consider the following info regarding annuity payments:
- Annuity payment start dates.
- Steady income for the recipient and the surviving spouse.
- Choose between a flat, rising, or stepped income.
- Accounts used to fund annuity premium payments.
Because annuity payments also offer tax advantages that will increase your spendable (after-tax) income, you must analyze all of these concerns and their tax implications and benefits.
The above may sound quite elementary. However, most people are more concerned with the size of the money pile, not if it may offer a lifetime income stream, meet life events, or give tax advantages.
How to Deal with Life’s Events
Frequently plan for the future and employ annuities or insurance to safeguard against actuarial or life risks. It is wise to constantly review your plan to make sure your expectations are met.
A life event might be things like:
- a severe but temporary medical ailment
- the realization that your home’s roof needs replacement
Both can be costly and have the potential to significantly diminish the value of your savings.
You can plan an emergency stash to tap into unexpected events. However, you should take into account that something like a lifelong illness can make funds dry up faster. Some circumstances require minimal revenue modifications to recover. There are insurance plans to cover long-term care insurance; however, the best time to look at them is when you are healthy.
How to Leave Behind a Legacy
Especially in retirement latter years, the optimal plan should involve no financial concerns. As a result, you won’t be paying as much every month, as you may be traveling less and downsizing (getting rid of the lawn mower and snow blower). There may, however, be additional costs that substitute these.
To secure either couple’s income (even if one spouse outlives the other by many years), annuities offer a payment option that continues to the survivor. Also, a Roth IRA allows your descendants to receive money without paying taxes if you invest extra earnings for a financial legacy. Or you may wish to open a health savings account (HSA) (HSA). You will discover that having a reliable money stream makes such choices possible. When creating a plan for your retirement income, you may also want to consider estate planning so that all your assets are secure.