If you’re an employee of one of the few remaining companies that offer a defined benefit pension plan, you are definitely part of a very small group. With this type of retirement plan, the amount of income that you’ll receive during retirement is a known and guaranteed amount. This, in turn, can help you with securing an income “floor” for the remainder of your life.
But if you work for one of the roughly 95% of other companies that do not provide retirement security through a defined benefit pension, how will you know the amount of income you can count on down the road?
The answer is, you don’t.
That is unless you create your own personal guaranteed monthly paycheck – and doing so can be much easier than you might think.
Shifting Gears and Getting on the Road to a Secure Retirement Income
The rise of the 401(k) plan has essentially put individual employees in charge of how to allocate their retirement savings, usually based on a list of investment options that are provided by the employer.
But, putting these types of decisions in the hands of those who aren’t financial experts can lead people down a dangerous path. For instance, even though the goal of retirement savings should be the eventual generation of future income, many plan participants are much more focused on scoring big returns, regardless of the potential risk.
What many investors do not realize, though, is that retirees don’t live on net worth. Rather, they live on income – and without a reliable source of incoming cash flow, it can be difficult at best to pay ongoing living expenses.
How to Create Your Own Personal Pension Plan
With the disappearance of the defined benefit pension plan, it is essential that retirees have an alternate source of dependable income – and ideally, an income stream that they cannot outlive (regardless of how long it is needed).
One of the best ways to accomplish this is with an annuity. Unlike most other types of financial vehicles, annuities can guarantee you an income for life. In doing so, a “base” income can be counted on, no matter what occurs in the market, or even in the economy overall.
There are many different types of annuities, too, so you can construct a plan that works the best for you and your particular financial goals. With more people living longer lives today, the income that you can count on from an annuity can reduce the worry about running out of income before “running out of time.”
Determining the Right Income Source(s) for You
If your (or your spouse’s) employer doesn’t offer a defined benefit pension plan, then setting up your own personal income stream for retirement may be necessary in order to ensure that you don’t run out of cash flow in the future.
Depending on which type of annuity you purchase – as well as the income payout strategy that you opt for – you could be able to count on a steady, ongoing income stream for the remainder of your lifetime, as well as the remainder of someone else’s.
Now that’s income security!
Want to learn more about how to “customize” your own pension plan?
If so, we can help. At Annuity Gator, we make learning about annuities easy – and with more knowledge about these benefit-rich financial vehicles, you can better determine what type of annuity, if any, is right for you and your specific financial objectives.
To learn more, feel free to visit our website any time – and to set up a time to chat with one of our annuity experts.