Retirement Income Planning

An endless parade of financial articles talks about saving enough for retirement and minding your retirement budget. But what about having more than enough money for your lifestyle goals? Just accumulating sufficient savings to last through your entire retirement is only part of the picture.

Decumulation, the Final (Retirement) Frontier

“The decumulation of assets in retirement is obviously a much more complex problem than accumulating assets before retirement,” said Emmanuel Roman, CEO of PIMCO, in an interview with Advisor Perspectives. He continued:

“Because of its complexity, decumulation is unlikely to be solved with a single solution; we’re going to need to combine a number of good ideas from different corners of the industry to solve this problem. To make a significant difference, one should start with an important problem. A big one is how to protect retirees from sequence-of-returns risk, or the risk related to the timing of retirement.” Read More

Sequence risk is the risk that you will take a big loss early on in the life of an investment portfolio. It’s already bad when you have investment losses at the early start of your retirement. It’s equally bad when you take losses just before you retire.

But if you are retired and taking withdrawals when the portfolio losses happen, the impact of those losses is compounded. By taking a withdrawal, you are already drawing down the balance of money in your portfolio from what it was prior.

If your portfolio also sustains a loss at the same time, the effects of both will come together to affect you. You will not only have to eat the loss, but you will further deplete the balance in your portfolio. So the timing of your withdrawals matters, especially in relation to how your portfolio performs. Read More

Paying the bills after you retire is quite different from during your career. After all, the income you receive will come from a variety of sources, as opposed as to earned income or a bimonthly paycheck.

Social Security, your own investment portfolio, a pension (if you are lucky), and maybe even part-time work can be sources of income that help pay for your retirement lifestyle.

The trick is therefore to maximize the total amount of income that you receive. But many Americans worry that they won’t have enough income during retirement to meet their needs.

The Alliance for Lifetime Income conducted a survey of 3,119 adults regarding their financial readiness for retirement. Eight in 10 (80%) of them expressed at least some level of concern that they won’t have enough income after they retire.

The survey revealed that 18% of the respondents were extremely worried about this. Meanwhile, 26% were “moderately” concerned and 36% were “somewhat” concerned about this issue.

Here are six key steps you can take now to avoid these concerns and maximize your income. You don’t have to wait until you are retired to start planning out the rest of your life. Read More

When you are still working, a rock-solid financial plan will do wonders for helping you accumulate money for retirement. This strategy will laser-focus on growth and accumulation as top goals. With a financial advisor’s help, you could stay on track with your plan and gradually build your savings for later years.

But things change as you near retirement. This period is called the ‘retirement red zone‘ for a reason. It’s a time when new planning is needed. Your financial plan will need to change gears, in some ways, in its focus from growth to retirement income.

This can be tricky in some cases, as today we face different challenges in retirement than those before us did. Longer living is one such issue now.

It’s a very real concern for many retirees, as one study by Allianz Life found. In the study, six in 10 retirees ranked running out of money while they are still living as a greater fear than death itself.

Just like the plan for growing your money during your career, an income plan can help you maximize your lifetime cash-flow. In turn, you can better enjoy the hard-earned fruits of your lifetime of work.

Many years of hard work brought you to this point. Now it’s time for your money to work and let you enjoy a comfortable, lasting lifestyle. Read More

Earlier in your career, you focused on saving and growing your money so you could pursue your financial goals later in life. You might have worked with a financial advisor to do this.

Over the years, you socked away money in a retirement account and maybe even grew an overall portfolio. That meant having and following a strategy with a focus on accumulation and asset allocation. But as we reach the so-called retirement red zone — that crucial period of a decade before and into retirement — new planning is essential.

The income you earned from your career likely won’t be the same once you retire. Then there is the challenge of making your money work for you.

How do you ensure that the income you draw from your portfolio is as efficient and tax-wise as possible? You want to be sure that your money lasts as long as you need it to in retirement! Read More

Franklin Templeton’s annual Retirement Income Strategies and Expectations Survey (RISE Survey) was recently released for 2020. This is the ninth year that the RISE Survey has been published.

The survey examines the concerns and attitudes of retirement savers. And it contains some very interesting data for retirement planners and savers alike.

In it, people of many generations share whether they think they are ready for retirement. The survey also covers what they are doing to accomplish their financial goals before they stop working.

As usual, this year’s RISE Survey wasn’t any different in the insights it drove home. Here’s a roundup of some findings that might be helpful for your own retirement planning efforts. Read More

As another year passes by, more people join the ranks of retirees. Since 2011, roughly 10,000 baby boomers have turned 65 years old each day, according to Pew Research. It predicts that trend to go on until 2029.

From second-act careers to volunteering and entrepreneurship, baby boomers are already reshaping the mold of retirement. And they are bound to keep redefining it, as record-breaking millions are set to leave the workforce.

With a new era of retirement living on the horizon, it’s prudent to take note of our retirement income planning strategies.

Will they provide reliable income streams and financial security for what could well be a decades-long retirement? Do they give a long-term assurance of you being able to enjoy your desired lifestyle? Or when it comes to these goals, does your income strategy have more of a question mark hanging over it?     

In their career years, many people work with a financial advisor to build their life savings and plan to continue so in retirement. One notable survey of 200 advisors by investment company Incapital shows how advisors are preparing today’s retirees for the economic uncertainties of tomorrow.

The survey’s focus? What retirement assets these financial advisors were using to generate retirement income for their clients. Read More

Calculating how much income you will need for retirement isn’t necessarily an easy task. Your health expenses will probably increase, but your mortgage payments may decrease or stop. Meanwhile, other expenses might continue to change over time.

Of course, you likely won’t have to deal with payroll taxes as much. Chances are you will also see expenses tied to employment, from transportation to a professional wardrobe, decline as well. But other costs may appear in retirement, from pursuing long-sought hobbies to traveling or spending more time with loved ones.

Although you may not even know where to start when trying to estimate how much retirement money you will need, there are a few rules of thumb that you can follow to help get you started. Read More

Nobel prize winner William Sharpe calls it the “nastiest, hardest problem in finance.” What is that? Decumulation, or the process of building a dependable lifelong income stream from your retirement savings.

It’s no wonder millions of Americans are asking if they will have enough money to retire comfortably. Between rising health costs, multiplying risks, and the real possibility of “lifelong” referring to what can be a very long time, there are multiple priorities to juggle as you build a personal retirement strategy.     

Many Americans worry about whether their life savings and income will last for the rest of their lives, as a recent survey found.

In the poll of 3,119 adults, aged 25-74, the majority of retired individuals (71%) felt confident that their savings and income would last. Meanwhile, just 42% of working-age Americans said they had that confidence.

The survey findings were published by the Alliance for Lifetime Income, a non-profit funded by life insurance carriers and asset managers to educate the public on annuities. Read More

Today, Americans bear more financial responsibility for their retirement than ever.

The days of receiving monthly pension checks are gradually fading. According to Willis Towers Watson, only 16% of Fortune 500 companies were offering pensions to new hires in 2017, down from 59% of firms in 1998.   

Defined-contribution plans like 401(k) accounts are taking their place. And this shift is huge. Now, people must count on them, IRA assets, and personal savings to create income streams that might need to last for a very long time.  

How long? Potentially decades. The Society of Actuaries estimates that among married couples who are 65, there is a 72% chance that one spouse will live to 85. Not just that, one of them has a 45% chance of reaching age 90.

In other words, someone may spend as much as one-third of their life in retirement. In the face of that, how do you ensure your nest egg lasts for the rest of your lifetime?

While the answer is different for everyone, a new study offers some fresh insights. The Georgetown University Center for Retirement Initiatives partnered with Willis Towers Watson to explore different ways to generate income in defined-contribution retirement plans.  

Their findings show how various lifetime income options, whether as a combination or as stand-alones, can help retirees better enjoy lifelong financial confidence. Read More