Planning for retirement: How to plan for retirement income

Imaging your retirement years and how you would want to spend them can be exciting - and planning ahead can help make that vision possible. To help turn that vision into reality, it’s a good idea to have a solid retirement plan. By preparing for both expected and unexpected costs — and making sure your fixed retirement income plan can cover them — you can be better positioned to make your savings last and enjoy the next chapter with greater confidence.

How much do I need for retirement?

Having realistic expectations about retirement costs, spending habits, and sources of income is a key part of effective planning for retirement. This helps build a strategy that can help support long-term goals and promote greater financial stability. To better understand income needs in retirement, consider the following:

How long will your savings last?

This question may help you identify if there are income gaps between expected income and actual expenses.

What is your expected income during retirement?

This may include Social Security, retirement accounts such as a 401(k) or 403(b), pensions, annuities, money from a part-time job, or income from other activities.

What are your estimated costs for retirement, including the mortgage, insurance premiums, paying off debt, and other day-to-day living costs?

Also consider possible unexpected expenses like a health emergency or the need for long-term care.

Review your savings portfolio and retirement accounts.

In retirement, the focus typically shifts from growth to conservation and from saving to spending. It's important to consider whether assets have the potential to keep up with inflation. At the same time, managing risks often becomes essential to help manage the overall portfolio.

Make fixed retirement income planning a priority

When transitioning from work to retirement, people may rely on their personal savings, retirement accounts, 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 fixed retirement income plan as part of comprehensive planning for retirement can be a step to improve retirement readiness and may help savings last. One option to consider is annuities, which can offer reliable, lifetime income. By providing a stream of payments that can support retirement, annuities help reduce the risk of outliving savings and add a layer of financial stability for the future. To help you put these ideas into action, explore our North American Financial Home Makeover resource—a practical set of tools and insights to help you organize your finances, plan with intention, and build toward a confident retirement.

Are fixed index annuities a good option? Key features of fixed index annuities (FIAs)

One type of annuity that can help secure retirement income and lessen the effect of market downturns is a fixed index annuity (FIA). A fixed indexed annuity can be a good option for those seeking guaranteed income options and index-linked growth potential. They can provide steady, predictable lifetime income, which can help cover essential expenses in retirement. FIAs credit interest based on a fixed rate or the performance of an index, subject to caps, participation rates, or spreads, and typically offer more conservative growth potential than variable annuities, so they may be useful as part of a diversified retirement income strategy.

Understanding the features of FIAs can help determine if they're the right fit for a retirement income plan.

Benefits of FIAs

Along with providing income payments in retirement, adding an FIA to a retirement income plan can help grow savings while protecting those assets from a degree of market volatility. Index credits are based partly on index performance without directly investing in the market. This means money has some protection from losses when the market goes down, and earnings can never be less than zero. This combination of upside potential and downside protection can help a person grow their assets for retirement while offering some protection for their hard-earned savings from changing market conditions.

Many FIAs also provide a “retirement paycheck” that offers a guaranteed income stream for the rest of your life. This steady source of income can help cover essential expenses and support a consistent standard of living throughout retirement.

Considerations of FIAs

While FIAs offer valuable benefits, there are some considerations to keep in mind. Growth is typically limited by caps or participation rates, which may limit potential gains compared to other types of annuities or investments.

Like most long-term financial products, FIAs may include features such as surrender periods or charges for optional benefits. A financial professional can help you understand these details and decide what’s right for your situation

Discuss more fixed retirement income possibilities with a North American Company financial professional

Planning for retirement involves many important decisions and creating a strategy that helps check all the boxes can be challenging. Working with a trusted financial professional who can give you helpful guidance can make this process easier and help align your strategy with all your goals for the future. Together you can assess your risk tolerance, discuss retirement income needs, and explore different types of annuities, and determine whether life insurance coverage fits into your overall financial plan.

Whether the goal is to grow retirement savings with limited downside market risk or turn a nest egg into a guaranteed income stream, a financial professional can help explain your options and create a retirement income plan that supports greater financial confidence. Connect with North American to discover how annuity options can help provide steady, reliable income for a more secure retirement.

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.

Fixed index annuities are not a direct investment in the stock market. They are long term insurance products with guarantees backed by the issuing company. They provide the potential for interest to be credited based in part on the performance of specific indices, without the risk of loss of premium due to market downturns or fluctuation. Although fixed index annuities guarantee no loss of premium due to market downturns, deductions from the accumulation value for optional benefit riders or strategy fees or charges associated with allocations to enhanced crediting methods could exceed interest credited to the accumulation value, which would result in loss of premium. They may not be appropriate for all clients. Interest credits to a fixed index annuity will not mirror the actual performance of the relevant index.

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