Planning for your income in retirement

It can be fun to think about retirement and picture how you’d like to spend your days. To help bring this vision to life, you’ll need to create an income plan. Preparing for planned and unexpected expenses — and ensuring your income plan accounts for both — will help you ensure your savings will last and support you through your entire next chapter.

 Make retirement income planning a priority

When transitioning from work to retirement, many people rely on their personal savings, investments, Social Security, and any pensions they might have. Rising inflation, longer lifespans, increased medical costs, and market volatility can all affect a person’s nest egg and the length of time those savings will last. Creating a solid income plan is more important than ever to help ensure you have the money to live a fulfilling retirement.

 Analyze your financial status

Having realistic expectations about your retirement costs, spending habits, and income can help you properly prepare for your financial life in retirement and create a strategy that supports your goals. To better understand your income needs in retirement, consider the following:

•  How long will your savings last? You’ll want to ensure there are no income gaps between your expected and actual expenses.
• What is your expected income during retirement? This may include Social Security, pensions, annuities, money from a part-time job, or income from a rental property you may own.
•  What are your estimated costs for retirement, including the mortgage, insurance premiums, paying off debt, and other day-to-day living costs? You also want to consider unexpected expenses like a health emergency or the need for long-term care.
•  Review your investment portfolio and retirement accounts. When you retire, you will switch from saving to spending. Will assets have some growth potential due to inflation? You may also consider minimizing investment risk to protect your portfolio better.

Consider a fixed index annuity

Suppose you have a retirement income plan that includes a variety of investments and savings vehicles that can be affected by market volatility. In that case, you may consider diversifying your plan to add more protection. One type of financial product that can help you secure retirement income and lessen the effect of market downturns is a fixed index annuity (FIA). Along with providing income payments in retirement, adding an FIA to your retirement income plan can help you grow your savings while protecting those assets from market volatility. You can receive index credits based partly on index performance without directly investing in the market. Your money is protected when the market goes down, and you can never earn less than zero. This combination of upside potential and downside protection can help you grow your assets for retirement while protecting your hard-earned savings from changing market conditions.

Many FIAs also provide a “retirement paycheck” that you can count on for the rest of your life. With this guaranteed income stream, you can rest assured that you’ll have the money you need to keep up with expenses and maintain your standard of living throughout retirement.

 Discuss retirement goals with a financial professional

There’s a lot to think about when preparing for retirement; creating a plan that helps check all the boxes can be difficult. Finding a financial professional you trust to offer helpful advice and guidance can make this process easier and ensure your strategy is aligned with all your goals for the future. Whether you’re looking to grow your retirement savings without downside market risk or turn your nest egg into an income stream, a financial professional can help you understand your options and develop a retirement income plan to help you make the most of your next chapter.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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