Retirement Planning
Retirement and its savings options have evolved over the years. This is not "your parents' retirement" in terms of the lifestyle you want to live in retirement or in terms of the methods used to fund it. There are many facets to a successful retirement strategy.
A New Retirement
Traditionally, pensions and Social Security funded a significant portion of retirement income. Today, the burden is on the retiree's shoulders to fund a significant portion of their own retirement. Are you prepared for this?
Additionally, many of us are living not only a much more active retirement but also longer in retirement than past generations. A good majority of us will spend 20-30 years in retirement. Many of us are in fact using this stage in our lives to realize dreams we couldn't while in our working years. This may lead us to live more fulfilling lives, but may also mean we need to prepare for a longer and more expensive retirement.
Planning for Your Income in Retirement
It is particularly important to have an educated guide when you start thinking about planning for what type of income you will have in your retirement years. Income planning requires real talent and a strong knowledge base that not everyone has. The generally required knowledge and understanding includes:
It is important to recognize the impact of maximizing your Social Security benefits and coordinating this with a retirement income strategy that incorporates steady income streams with potential for pay raises. Pay raises are necessary because the impact of inflation, sometimes dubbed a "stealth tax," on your purchasing power.
Let's think about this- if you retire at the age of 60 with an annual income need of $75,000, you would require your income to double to $150,000 by the time you reach the age of 85 (assuming an annual inflation rate of 2.9% per year) in order for you to have the same purchasing power. If your income falls short because your remaining assets cannot support this progressive need for increasing income in retirement, what will you do? At age 85, you are unlikely to want to, or perhaps even be able to, go back to work. This is why it is so important that your long term retirement income strategy focuses on pay raises that can cater to the genuine need for an increasing income in your retirement.
Risk Tolerance
It is important for you to understand your risk tolerance, both personal and situational, when thinking about how to approach your income in retirement. If you aren't as aggressive with your finances, you shouldn't place your nest egg into aggressive arenas. If you are closer to or in retirement, even if you are naturally more aggressive with your money, you will likely need to exercise more caution because of the dramatic impact a sudden and substantial loss could have on your ability to retire or stay retired.
Education Resources
The following information will be useful as you begin thinking about your strategy for your retirement years and beyond. Taking an early, integrated approach is key. The more time you have to build your retirement nest egg and have it work for you in protected yet productive ways, the better prepared you will be for achieving the retirement lifestyle of your dreams.
Retirement Lifestyle
- 6 Great Jobs for Retirees
- 10 Best-Rated States for Retirement
- The Company You Keep
- Things Baby Boomers Won't Say
Finances in Retirement
- Smart Buyer Checklist
- Fixed Indexed Annuities: The Basics
- Minimize Risk and Maximize Peace of Mind
- NAFA Fixed Annuity Presentation
- NAFA Educational Videos for Consumers
- Indexed Annuities 101
- Indexed Annuity Leadership Council Educational Videos
- Indexed Annuity Leadership Council Testimonials
- Say Goodbye to the 4% Rule
- Are annuities the solution to the old 4% retirement rule?
- Retirees need fewer stocks, more annuities
- 5 Retirement Mistakes that Will Haunt You
- 5 Retirement Mistakes Boomers Should Avoid
- The Other Midlife Crisis
- Will You Need 135% of Your Salary in Retirement?
- 4 Percent Withdrawal Rate May Be Too High for Today's Retirees
- A Two-Step Plan That Strengthens Your Nest Egg
- Retirement Health Care Costs: How to Deal
- Hedging 7 Big Retirement Risks
- Could Being Healthy Actually Make Your Retirement Worse?
Forced Early Retirement