The weekend Wall Street Journal brought us another piece that underscores the need for stable lifetime income in retirement. Fewer and fewer people retire with employer pensions, yet we all must plan for retirement that may stretch into our 90's or longer. The article says:
Far more people will retire without pensions and will need to rely on their accumulated savings to pay for everything that Social Security doesn’t cover.
So how will you turn those funds into the monthly income you will need to pay your bills? The answer is murky at best.
Previous generations built "ladders" of bonds with staggered maturities and invested in dividend-paying stocks, expecting to live solely on the returns. But low interest rates and a volatile market have made those strategies difficult
The article continues with good pointers and explores the pitfalls inherent in relying on any one strategy alone. It should sound familiar to regular readers of Annuity Straight Talk. Our pages on building your own Private Pension explore the topic thoroughly.
The Lifetime Income Answer:
It doesn’t take extensive analysis by The Wall Street Journal to get to a Main Street common sense conclusion: In retirement, individuals need to convert their assets into income, and need it to last a lifetime. And in to be in harmony with their risk tolerance, they should find as strong a guarantee as possible to absolutely, positively ensure that they can never run out of income. That is a secure retirement.
Turn that statement around for a second- if you are comfortable facing the chance of losing a significant portion of your assets in a stock market downturn, and possibly being forced to radically alter your standard of living to suit your diminished means, then by all means, stay invested in the markets.
Hopefully, this illustrates that a more prudent strategy is to lock in enough income to guarantee your base standard of living. Take care of housing, food, and cost of living with Social Security, annuities, and/or pensions- and then leave your remainder assets invested in the markets, real estate, or other endeavors. That way, when the next market crash comes, you will have insulated yourself from the most dire consequences.
The Journal closes with this advice as well:
Ultimately, we may have to become as alert to retirement asset-allocation and withdrawal strategies as we have become at investing and accumulating. Depending on how much you save and how much you want to spend, you may find you want a mix of products and services.
A mix of products and services is definitely appropriate, and will vary for everyone. No one size fits all. Annuity Straight Talk stands ready to assist you in devising a lifetime income strategy suitable for your needs. Give us a call at 800-438-5121.