In the past, many people went through life without having to worry about their future retirement income plan. That’s because, in many cases, retirees could count on a guaranteed pension income from their former employer – and oftentimes, this income stream continued to pay income to a surviving spouse when the retiree passed away.
But this isn’t the case anymore!
Fast forward to the present time where employer-sponsored pension plans have all but disappeared. On top of that, Social Security is becoming more iffy, as there are less than three workers paying into the system today for every one benefit recipient.
How long do you think that “strategy” will last?
The good news is that retirees still have some options available that can provide long-term income, while at the same time protecting principal in any type of market or economy.
Where Will Your Retirement Income Come From?
Retirement income planning is essentially the process of assessing your mix of income sources in retirement, and then determining when and how you will draw from those sources.1 This process should also include identifying any potential “gaps” you may have between what will go out in expenses and what you will have coming in.
There are a number of different sources that could generate income for you in retirement. These include:
- Guaranteed Income from a pension (although this source is becoming less likely over time)
- Social Security
- Reverse mortgage
- Real estate/rental income
- Wages from a part-time job
How to Set Up Your Guaranteed Retirement Income Stream
Even if you’ve been a good saver all of your life, the five or so years that lead up to your retirement can be particularly important in terms of how successful the next phase will be. That’s because it is during this time that you need to start setting up a good solid income plan that can sustain you for many years.
It is estimated that roughly one in every four of today’s 65-year-olds will live past the age of 102. So even if you wait until age 65 to retire, will you have an income plan in place that will not only provide you with enough to pay your day-to-day expenses, but that will also allow you some discretionary income for entertainment and fun, and will increase over time to help you keep pace with inflation?
If not, you should.
One of the best ways to ensure that you have an ongoing income “floor” for a set period of time – or even for the remainder of your lifetime – is to purchase an annuity. Annuities are designed for paying out an income stream in return for either a lump-sum deposit or a series of deposits over time.
The beauty of annuities is that they can allow you to focus on enjoying your retirement because you are assured of an ongoing “paycheck” no matter what happens in the stock market. And because of that, annuities can provide benefits that no other type of income source offers.
|Annuity Type||Premium(s)||Annuity Income Payments|
|Immediate Annuity||One lump sum||Begins within 12 months|
|Deferred Annuity||One lump sum, or payment installments over time||Begins at a time in the future|
If you purchase an annuity that you won’t convert to an income stream for several years (i.e., a deferred annuity), the funds that grow inside of that account are allowed to increase on a tax-deferred basis. This deferral of taxes can allow your money to grow and compound faster than funds in a taxable savings or investment account.
Annuities can offer other benefits, too, like a death benefit, and/or penalty-free withdrawals if you are diagnosed with a terminal illness or you have to reside in a skilled nursing home for a certain period of time.
Is an Annuity Right for You?
Although annuities can provide you with peace of mind in knowing that your income will last, these financial vehicles are not right for everyone. And, if an annuity does sound like a viable option, you still run the risk of committing to the wrong type.
That’s where the Annuity Gator can help.
At Annuity Gator, our focus is on researching and reviewing all sorts of annuities, including fixed, indexed, and variable. You can find in-depth details about individual annuities in our extensive annuity review database on our website.
If you need more details regarding how certain annuities may perform – or if you’d like to compare several different annuities to determine which one may work the best for you and your objectives – feel free to contact us directly for a no-charge, no-obligation chat with an annuity specialist.
You can reach us by phone at (888) 440-2468, or through our secure online contact form HERE and set up a time to chat with us. We know how important it is to feel secure with your retirement income plan in place. We look forward to hearing from you.