Income Planning

A Blueprint for Retirement: The Importance of Income Planning

In the realm of retirement planning, income is the outcome that truly matters. Whether you’ve amassed a fortune or have modest savings, the reality remains: you’ll likely need more money than you anticipate. Let’s delve into the intricacies of income planning and why it’s pivotal for a secure retirement.

Guaranteed Expenses Demand Guaranteed Income

Every retiree has fixed, non-negotiable expenses that require a steady flow of income. The challenge lies in determining the total amount needed for retirement and the monthly income this sum will generate. More importantly, can you be certain this income will sustain you for life? Many grapple with these questions, often sidetracked by daily life or market fluctuations.

The Evolving Landscape of Retirement

Historically, retirees could lean on pension plan annuity payouts, government pensions, and Social Security. However, the dynamics have shifted. Many traditional company annuity and pension plans, which once guaranteed lifetime payouts, have vanished. Now, employees bear the investment risk, hoping their retirement outcomes align with their aspirations.

Addressing Modern-Day Concerns

With these changes come pressing questions:

  • Will Social Security remain a dependable income source for future retirees?
  • How will couples navigate the loss of Social Security income after one spouse’s demise?
  • If you have a pension, is it structured for single-life or joint lives payout?
  • Can stock market accounts consistently provide monthly income for 20-30 years, especially given market downturns and events like pandemics?

The Reality of Market Volatility

Over the past two decades, the market has seen 50% losses twice. If such a downturn occurs during a 20-year retirement, how might it impact your lifestyle? A study by Morningstar suggests that a $1,000,000 retirement account, with a 2.8% withdrawal rate over 30 years, combined with a 40% stock allocation, offers a 90% success rate, given low-interest rates. But is an extra $28,000 annually sufficient? And who will oversee stocks, allocations, and fees for three decades?

No Second Chances in Retirement

The likelihood of facing at least one significant income disruption during a 20-30-year retirement is high. In these uncertain times, are you prepared to risk your retirement income, barring Social Security and pensions? Fortunately, there are strategies that, when aptly structured, can yield high returns in prosperous years while safeguarding against market downturns, income taxes, and broker fees. Moreover, they can guarantee a lifetime income.

Secure Your Financial Future

Why leave your retirement to chance? There are no do-overs in retirement. Evaluate your current retirement plan and consider a stress test to anticipate worst-case scenarios. Discover if and when you might deplete your funds. Take proactive steps now to ensure a comfortable and financially stable retirement with an income you can not outlive.