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Will You Take a Pay Cut in Retirement? You Could If You Don’t Put the Right Income Plan in Place

Will You Take a Pay Cut in Retirement?

According to a recent Insured Retirement Institute (IRI) study on “Retirement, Income, and Risk”, roughly one-third of retirees stated that they saw a 25% reduction in their income since retiring – and 21% have seen their income decrease by 50% or more.

Based on figures from this same IRI survey, the average married couple receiving Social Security benefits took in just over $28,000 from this source in 2018. So where is the rest of their income coming from?

Unlike retirees in the past, it isn’t likely coming from employer-sponsored pension plans. That’s because more and more companies are “trading in” these types of plans – due in large part to their expense – and replacing them with “defined contribution” plans like the 401(k).

While there’s no doubt that there are some nice tax advantages for 401(k) plan participants, the hard truth is that today, having enough income in retirement has become the sole responsibility of the individual employee, as versus the employer.

And for most people, that is not good news.

That’s because most people – including financial advisors – know that saving and investing during your working years is important. But what many are not very knowledgeable about is how to convert those savings over to a long-lasting income stream that will last for the remainder of their life.

How to Know and Control Your Income in Retirement

The IRI study goes on to state that more than 20% of retirees who must make withdrawals from their savings collected less than they had expected. This, in turn, can have a negative impact on lifestyle going forward.

It can also force retirees to live a “just in case” retirement, worried that if they spend too much of their savings now, they won’t have enough to get them through the future.

But there is a solution for that.

Many retirees, and pre-retirees, today have turned to annuities. These financial vehicles can promise an ongoing income, no matter how long it is needed, regardless of what happens in the market.

Knowing that you have a “base” income that you can count on is not only essential for solving financial needs, but it can also help to alleviate the stress that comes with not knowing when savings – and thus, income – will run dry.

Based on the Insured Retirement Institute study, due to the security that a known income stream can provide, eight in ten annuity owners who are receiving lifetime income payments stated that they are satisfied with their annuities.

Don’t Leave Your Retirement Income to Chance

We’ve all heard the phrase, “Hope is not a strategy.” This is particularly the case when it comes to planning (or not planning) your retirement income. Gone are the days when our employers took care of us, both before and after we retire.

So, why do so many investors put off making what could be the most important decisions of their lives?

At Annuity Gator, we specialize in helping consumers understand how retirement income works, and which financial tools may best fit their anticipated future income needs. This includes comparing annuities side-by-side, based on your particular parameters like years until retirement, risk tolerance, and specific financial goals and needs.

If you’d like your retirement income stream to be based on more than just hope, feel free to reach out to us via our secure contact form or call us toll-free at (888) 440-2468 and chat with one of our annuity and retirement income specialists.

Going into retirement knowing that you’ve locked in a secure income can make all the difference in the world between living the future that you’ve hoped for, or wondering how you’ll be able to pay next month’s bills.

Will You Take a Pay Cut in Retirement?

2 thoughts on “Will You Take a Pay Cut in Retirement? You Could If You Don’t Put the Right Income Plan in Place”

  1. Samuel Basinger

    I have a 401 k at work but I don’t know much about annuities interested in more options being I turn 52 years old next week preparing for retirement thanks

    1. Hi Samuel – Thank you for your message. We would be happy to walk through more information about annuities in general, as well as take a look at which annuities could work well for you, given your specific objectives. In order to do so, we would need to gather more information from you. Rather than sending sensitive details back and forth via email, it would be better to chat by phone. Please feel free to reach out to us at your convenience at (888) 440-2468 to speak with one of our annuity experts. We look forward to hearing from you. Best! Annuity Gator

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