Instead, he invested about 12% of his nest egg in a couple of annuities that will pay him a steady income in retirement. If he continued on the same high-pressure career path, he says, “you would have carried me out of there.”Īfter consulting a financial planner, Gajewski realized that he didn’t need to swing for double-digit returns in the stock market or work himself into the grave. But as he entered his late fifties, he worried that a market slide could crush his nest egg-and working well into his sixties wasn’t an appealing back-up plan.
For most of his 35 years in the auto industry, the 61-year-old invested aggressively in his company 401(k) plan. By cobbling together various sources of guaranteed income, Walt Gajewski, of Farmington, Mich., freed himself from worries about a stock market crash-and from the need to remain in a stressful job. Delaying Social Security, for example, may mean a few more years in an office that you’re eager to leave, and buying an annuity can mean giving up access to a substantial part of your nest egg.įor retirees who find the right retirement-income formula, however, the rewards can include financial security and the freedom to live on their own terms. Each retiree must pick and choose the ingredients that best fit his or her goals-and confront some tricky trade-offs.
No single retirement-income recipe will work for everyone. And most employers have done little to fill the guaranteed income vacuum left by the extinction of defined-benefit pension plans. In the Greenwald survey, only half of people working with an adviser said they’d had a conversation about retirement-income strategies. Yet retirees are often left on their own when it comes to generating retirement paychecks. In a 2018 survey of 55- to 75-year-olds with more than $100,000 in household assets, 73% said that guaranteed income was a highly valuable addition to Social Security, up from 61% a year earlier, according to research firms Greenwald & Associates and Cannex. Given longer life spans and rising health care costs, interest in guaranteed income is growing fast. By maximizing Social Security benefits and any available pension income, incorporating plain-vanilla immediate or deferred income annuities, and perhaps adding in a reverse mortgage that allows your home to bolster your retirement-income plan, most retirees can build an income floor that will support them as long as they live. Lifetime guaranteed income-and the accompanying peace of mind-is within reach. “Why should what you hear on the 6:30 news upset your retirement plan?” asks Jerry Golden, chief executive officer of retirement-planning firm Golden Retirement. That could allow you to take that bucket-list vacation without fear of derailing your retirement, greatly simplify your financial life in the event you face cognitive decline in your later years-and let you shrug off market dips like the one we saw in October. Wouldn’t it be nice to replace that element of chance with some solid guarantees? Imagine a stream of income, locked in for the rest of your life, that covers all your essential living expenses. What if the stock market doesn’t cooperate? What if we encounter massive unexpected expenses? What if all our calculations are wrong and our savings run dry mid retirement?
Most retirement plans blend hard work and diligent saving with a lot of what-ifs. This article was originally published in Kiplinger.
0 kommentar(er)
