Tag Archives: Savings

Building sustainable streams of retirement income

3-bottom, Citizen Journalism, Finances, Senior Living,

By David Stanley
Integrity Financial Service, LLC

(Pxhere.com)

Our parents and grandparents both taught us that making mistakes was part of life.

Some mistakes are easier to recover from than others. But when it comes to money and time, the closer you are to retirement, the less time you have to recover from bad money moves. My advice is not to take any chances you can’t afford. As you near retirement, you’ll need to spend more time creating an investment approach that aligns each account to its specific goal for cash flow requirements during retirement. The worst times for your investment portfolio to take a hit are somewhere in the five years before and five years after you retire. Some have called this the red retirement zone. Lose money in this segment, and it will significantly impact how you spend and withdraw money throughout your retirement years.

Here’s a new retirement approach. It’s not about being rich; it’s about having the income needed to have peace of mind. We may never tire of discussing lessons from The Great Recession, which hit two groups especially hard–teens who saw their parents lose a home or job, and boomers who saw their savings depleted precisely at the wrong moment in life. So proper financial planning for retirement is crucial to your success. Boomers need to learn that they are leaving the accumulation phase of their life and now will be focusing on asset protection, sustainable income, and distribution of their assets over the next 30+ years.

Many people are in this category express extreme insecurity regarding the reality of ever retiring and having a sufficient income stream during their retirement years. So what can Worry-Free retirement income solutions offer you? Our planning provides a retirement income trifecta.

First is a guaranteed sustainable way to maintain income in retirement.

Second, are potentially higher income payments than you can achieve anywhere else.

A third is a reduction of some of the market risk from your overall portfolio before and during the years of your retirement when you can’t afford to endure the consequences of a market downturn. It may be true that money can’t buy you love, but it can buy happiness in retirement, as sufficient amounts of guaranteed income equal a happy retirement.

Planning with certainty is the new strategy for retirement income. For nearly two decades, financial advisors subscribed to the notion that their clients could spend 4% annually of their accumulated savings in retirement and not run out of money. No more. Between market volatility, inflation, volatile interest rates and an uncertain economy, advisors are questioning the traditional approaches to retirement income. Of course, what you consider an uncertain economic environment depends on who is reporting the news and what day it is. But it doesn’t matter if you’re properly planned.

Simply put, today’s retirement portfolios demand a smarter balance of growth and safety to effectively achieve a stream of lifetime income. The good news is that the answers to the challenge are emerging in the form of improved strategies that promise to generate more income at less cost and with less market risk.

Don’t be like Scarlet O’Hara, who said, “I can’t think of that right now. If I do, I go crazy. I’ll think about it tomorrow.”

It would be best if you thought about it today.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Financial Perspectives: Annuities are a logical solution for longevity risk

3-bottom, Finances, Local Business, Senior Living, , ,

By Dave Stanley
Integrity Financial Service, LLC

Transitioning from being a saver to a spender means you will be required to not only keep close eye on your investments, spending and taxes, but for also creating your own “paycheck.” (pxhere.com)

“Transitioning from saver to spender can be a disconcerting shift for many seniors. A more systematic approach to spend-down can help.” 

Transitioning from being a saver in the accumulation phase to a spender in the spend-down stage of your financial life means you will be required to not only keep a close eye on your investments, spending, and taxes but for also creating your own “paycheck.”

This paycheck might result from living off the interest or dividends from investments for some retirees. Others may prefer more predictable income sources, including annuities and Social Security. These “safe money” assets can help you achieve more peace of mind and perhaps cover your basic living expenses.

Shore up your emergency savings

It’s crucial to take a systematic approach to the problem of how best to spend your money in retirement. You should ensure you have enough money to cover unexpected expense to last at least a year. Suppose you’re worried about having to sell off investments in a bear market to cover emergencies. You might want to discuss rebalancing your portfolio with your advisor, perhaps using more liquid assets.

Include predictable income streams, using annuities and life insurance

Most planners understand, at least on a fundamental level, the power of annuities to help their clients avoid running out of money when they retire. After all, almost every financial services company offers annuity products, and they have done so for many years. Modern retirement research has produced volumes of data-based reports confirming the value of an annuity in a retirement portfolio. Life insurance and annuities may suit retirees who desire the protection of their principal, a predictable stream of lifetime income, long-term care options, or want to leave a legacy to a family member.

Despite the positive data surrounding annuities, many advisors are reluctant to offer them to their clients. This reluctance is often because they believe there will be pushback from clients who have heard negative things about the product through the media or online.

Many popular financial entertainers such as Dave Ramsey have been openly antagonistic about annuities and continue to spread myths and misconceptions to their viewers.

However, continuing changes in retirement plan structure and funding of employer plans have caused more people to dig deeper into safe money and income products to create their pension plans.

Since 1974, the traditional defined benefit (DB) plan, which provided retirees with benefits based on final salary and years of service, has disappeared from the private sector. Replacing it is the direct contribution plan in which employees and their employer regularly contribute to accounts in the employee’s name. Direct contribution plans benefit companies by lowering their expenses. But they place the burden of retirement success squarely on the shoulders of the individual. If you participate in a workplace plan, both longevity risk and performance risk have been shifted to you. Standard direct contribution plans do not guarantee your account will provide lifetime income and running out before you die is always a distinct possibility.

That’s why most retiree portfolios will benefit from strategically designed insurance and annuity products. Strategically designed life insurance is another way to create more predictable, tax-advantaged revenue streams. Properly structured, life insurance offers investments like stocks, bonds, CDs, etc. Annuities relieve the consumer of the need to set aside additional money to offset potential risk and fees for managing the account.

If fear of managing your retirement accounts paralyzes you and causes you stress, simply pass it to a risk bearer, an insurance company. Let the annuity provide you with a safe and secure income.



Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

The Importance of Guaranteed Retirement Income

3-bottom, Citizen Journalism, Community Health, Education, How-To's, Senior Living, , , , , ,

Courtesy Vista Springs Assisted Living

By Vista Springs Assisted Living

 

For most adults reaching retirement age, finances are looking pretty grim. By most studies, more than half of the Baby Boomer generation isn’t financially prepared for retirement, and as many as 30% have no retirement savings at all. Experts are worried about how new retirees will fare, or if retirement as we currently think of it will even still exist. So if savings can’t save the day, what can?

Why do you need it?

While many of the people who have been retired for a while have managed to maintain their nest egg while enjoying pre-retirement lifestyles and spending habits, younger retirees and adults approaching their full retirement age shouldn’t count on the same fortune. Americans nearing retirement have a median retirement savings of about $147,000, which is more than $500,000 shy of the amount that experts project is necessary for a comfortable, financially stable retirement.

 

Sources of retirement income are one way that current and future retirees are dealing with their finances. From estimated medical costs as high as $280,000 to cost of living to travel and entertainment, there’s so many aspects of retirement that require financial security. So what can you do?

What are your options?

Social Security

The in’s and out’s of Social Security can be difficult to navigate. If you’ve already claimed your benefits and have been receiving monthly payments for a year or more, the amount you can receive each month is more or less locked in aside from cost-of-living increases. If you haven’t claimed yet, or if you’ve been receiving benefits for less than a year, you have some choices to go over with your financial advisor.

 

First, the age at which you claim benefits has a huge effect on how much money you’ll receive each month. At the minimum age of eligibility, 62, your benefit could be reduced by as much as 25-30%, depending on your full retirement age (FRA). Then, at your FRA, you can receive your full benefit with no reductions. Or, for every year you wait to claim after your FRA and up to age 70, you can earn an 8% bonus to your benefit. Everyone’s situation is different, so one age is not necessarily always better than another, but many financial planning experts advise waiting and betting bonuses if your health and financial situation will allow.

 

Employer Pensions

Today, employer pensions are becoming rare, but they do still exist. Public service workers, such as the police force, firefighters, judges, and public teachers have always had pension plans, and other government positions also offer pensions. Because pensions are part of an employee’s compensation package, the amount of retirement income they provide varies based on industry, position, and even from person to person.

Retirement Accounts

While you can open your own retirement accounts, they are generally associated with employer-provided benefits. These benefits, such as 401(k)s, 403(b)s, deferred comp plans, SIMPLE or SEP IRAs, and more, may not be income like pensions are, but function in much the same way after retirement. You are required to withdraw a minimum amount per year after age 70½, though earlier withdrawals may help reduce your lifetime tax bill. Transfers can be done in a lump sum (though we don’t recommend it), quarterly, monthly, or on a different schedule as long as the minimum is met annually.

Savings Accounts

Your personal savings aren’t actually guaranteed income, but barring emergency expenses, you should treat money you withdraw about the same as you treat Social Security payments or retirement account withdrawals. Budget your spending and pay yourself a monthly paycheck from your savings account, and don’t go over that budget. The main difference is that you can withdraw more money if you need to, in case of an emergency medical expense for example, whereas other sources of retirement income generally pay out a regular amount that you have little to no control over.

Annuities

Annuities are somewhat unique in this list, as they can be obtained after you’ve already retired, and some, like fixed indexed annuities, have the option to be truly guaranteed retirement income, meaning that you will always receive income from them regardless of your financial situation, the markets, and other variable factors. There are different types of annuities that may be better or worse for your needs, which you should discuss with a financial advisor.

Part-time Work

And of course, one way to earn retirement income is simply by earning income from a job. There are many part-time work opportunities that allow retirees to supplement their savings while still maintaining a retirement lifestyle, and more retirees are becoming entrepreneurs for enjoyment and income. Continuing to work isn’t part of the traditional picture of retirement, but it’s quickly becoming more common.

 

While retirement savings across the board aren’t where they should be, a financially stable retirement is possible with enough planning. Take stock of your options for retirement income, and speak with a financial advisor to get the clearest picture of your finances.

 

Reprinted with permission from Vista Springs Assisted Living.