YOU WORK VS MONEY WORK FOR YOU?

The success of your life when you are not actively working, will depend on your answers to these 2 questions:

1. How much guaranteed life time income do you have?

2. Have you taken the keys risks of the table?

An income strategy that addresses the need for growth potential, access, and predictable income can help you feel more confident about your future.

The 4 Box Strategy® of income planning is a simple way to identify projected income and expenses at the time when you are not actively working. This provides examples of necessary and discretionary expenses, and indicates the income sources that should be used to pay for them. With this strategy, predictable income is used to cover your necessary expenses, while income from other assets is used for discretionary expenses.

Although we can’t predict the future, we can prepare for it. Knowing how key risks can affect retirement income security can be a sound first step.

Risk #1 Longevity: The possibility of outliving your assets due to advanced medicine and technology are

allowing people to live longer — and that can translate into extended retirement and a bigger strain on savings. Most of us would choose to live a longer and healthier life, even if it increased the risk of outliving our savings.

Risk #2 Health care costs: The risk that health care expenses may derail your retirement budget. The trade-off for an increased life expectancy may be having to spend more money on health care. The cost of health care is a concern for many of us — especially as we age. It’s important to think about potential out-of-pocket costs as you consider your predictable income needs.

Risk #3 Inflation: A reduction in purchasing power over time and even a low inflation rate reduces your

purchasing power over time, because as prices rise, a dollar buys less. Inflation can put more pressure on your retirement portfolio because you may need to withdraw more just to maintain your standard of living. Your money should atleast grow at an annual inflation rate. 

Risk #4 Housing expenses: The biggest percentage of retiree household budget are the costs associated with housing are often overlooked in retirement income planning. You might assume that if you have paid off your mortgage before retiring, future costs will be manageable — perhaps even negligible. Anyone who has maintained a home for any length of time knows that this is not necessarily true.

Risk #5 Market factors & Volatility: The sequence of investment returns Investment losses early in retirement can reduce a portfolio’s value and its overall sustainability. Depending on how your portfolio’s assets are allocated, you may end up drawing down your money faster than you originally expected. You might need to decrease your withdrawal rate, make lifestyle modifications, or both.

In exchange for a single purchase payment - Single Premium Immediate Annuity (SPIA), the insurer guarantees (you transfer your risk to an insurance company)  income that begins immediately and continues for life, for a specific length of time (referred to as a “period certain”), or a combination of both, depending on the option you choose. 

Disclosure/Disclaimer

Annuities are long-term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Early withdrawals may be subject to withdrawal charges. Optional riders are available at an additional cost. All guarantees are contingent on the financial strength of the issuing company.

As the only thing that is constant in life is change, it is imperative to monitor your portfolio on an ongoing basis (for changes in goals, needs & risk profile) and especially at the time of change in circumstances. 

Ease your tax burden with a balanced withdrawal strategy