Retirement Income Strategies For Every Age

The Retirement Reality is You May Be More Active and Live Longer Than You Think

Being old is relative. Back in 1935, a 65-year-old would live on average another 12 years. Today, the Society of Actuaries says that the average man at 65 can expect to live another 21 1/2 years, and the average woman another 23 or more years.9 If members of your family have lived long lives, plan for the chance that your retirement savings will need to stretch 30 years or more. With today’s advances in medical care, people are just living longer.

Plus, individuals are spending their retirement years more active than ever.10 We want to live a full life and maintain a standard of living at least close to what we enjoyed before retirement. With inflation and increasing health care costs, that means we may need more money in our retirement to enjoy the same lifestyle we do today.

Keep in mind that the money you have saved and invested for retirement should be working for you by earning interest until you withdraw it. Part of the solution for spending more years in retirement and not outliving your savings is deciding how to handle your retirement money.

This means having a continual investment strategy throughout your lifetime that will grow your savings while protecting your nest egg against market downturns. Lastly, you may want to have a withdrawal strategy in place that could help you pay less tax on money you take out of your retirement account and continue to grow the money you leave in.

Real-Life Retirement Income Challenges

Today, many Americans struggle with saving enough for a comfortable retirement. No matter what stage of life you’re in, economic conditions (past and present) as well as competing interests such as the cost of raising a family, a mortgage, medical expenses, and other financial obligations all seem to get in the way. To better illustrate some of these challenges that many Americans face at various life stages, let’s take a closer look at three real-life examples of people who are living it. By considering some of these challenges and consequences, you can formulate a better retirement strategy today, and well into in the future.

Retirement is on the Horizon

Touring the corners of the globe. Basking near a campfire, surrounded by grandchildren. Learning French . . . painting watercolor landscapes . . . handcrafting furniture . . . serving up meals in a soup kitchen . . . knitting baby hats.

When you think about retirement, what do you picture? Whatever it is, one thing is certain: you’ll need money to fund those big—and not-so-big—plans.

You might stop working at a certain age, but the daily demands of life won’t stop coming. Mortgage payments. Car repairs. Cell phone bills. Medical expenses. And those are just a few of the basics. You’ll still want to enjoy your favorite restaurants, escape on weekend getaways, lavish those adorable grandkids with gifts, maybe take a cruise or six . . . you get the idea.

If you may be getting confused thinking about how to afford your retirement, take a deep breath. Planning for retirement income doesn’t have to be overwhelming. Understanding the basic principles of financial and retirement income planning and financial planning basics can make your golden years much clearer and less complicated.

Relax. You’ve got this. Think of all the things you’re already doing to provide for your family’s financial future. Working hard, saving, budgeting, investing—you know how to get things done. And we’re here to help you with the retirement income part.

Your Retirement Reality Top Resources

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Retirement Income Planning FAQs

Learn from frequently asked questions and explore tools to get started planning for your retirement income with ease and confidence.

Common Retirement Income Planning Terms and Phrases

Retirement income planning has a vocabulary all its own, and navigating it might leave you feeling like a tourist in a foreign country.

A story about Tim and Kari

Planning for retirement while grappling with debt

Tim and Kari are in their early 50s and looking forward to enjoying a retirement that’s roughly 10+ years away. With good jobs, they both saved what they could. However, with two children still at home, another 16 years on the mortgage, lingering student loans, and the rising cost of living, they’re challenged with paying down debt while saving enough for their future.

When Kari’s company downsized in 2008, she was laid off and remained unemployed for three years. Fearful of falling too far behind on debt, Tim discontinued contributions to his 401(k), put both of their student loans in forbearance, and tapped into their savings to supplement their budget.

Your Retirement Reality Tip

Fifty-eight percent of American workers and 44 percent of retirees report having a problem with their level of debt.

— Employee Benefit Research Institute

Kari went back to work, but during her unemployment, they depleted their savings account, accrued substantial interest on student loans, and have fallen significantly short of their retirement savings goal. Knowing that they’ll now have to work longer to pay off debt and to replenish their emergency fund, the couple has decided to downsize, allowing them to establish an aggressive budget to contribute as much as possible toward their employer sponsored and individual retirement accounts. With retirement on the horizon, they’re working with a licensed professional to help them build a balanced portfolio that’ll help them get that much closer to their goals.

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Retirement is Right Around the Corner

Given the economic circumstances many Americans have lived through over the past decade, it’s helpful to know that there are ways to take advantage of guaranteed retirement income benefits, regardless of where the economy heads in the future. This section will give you facts and insight to help you make wiser, sounder choices about your retirement income. The more you know, the better you can plan.

Check out the following sections to learn more about guaranteed sources for your retirement income:

Guaranteed Income Planning for Retirement

Explore the features, benefits, and drawbacks of the different income sources in retirement, and how to best leverage them as retirement income.

Retirement Income Sources

From annuities to Social Security and most everything in-between, here you’ll find clear, simple explanations of each type of retirement income—including the basics of how they work, pros and cons, and some important considerations.

Taxes in Retirement

You can’t plan for retirement income without taking taxation into account. Until the other inevitability comes to pass, the IRS will continue taking its share—and it can be a doozy.

A story about Kathy

Planning for a retirement that’s right around the corner and worried about saving enough

In her late 50s, Kathy planned on retiring within the next four to five years. Having experienced minor financial setbacks, she was less worried about meeting everyday expenses and more concerned about maintaining her good health while saving enough money to enjoy a comfortable retirement. After decades of diligently saving, Kathy built up her retirement savings and was sitting on nearly $1 million in municipal bonds.

But as a conservative investor concerned about losing what she worked so hard to save, the numbers weren’t adding up fast enough. Under current market conditions, if she was to spend approximately $40,000 a year while in retirement and adjusted for inflation, there is a very real probability of Kathy running through her bond portfolio before she dies.

Your Retirement Reality Tip

Only 18 percent of workers feel ‘very confident’ about having enough money for a comfortable retirement, and 24 percent are ‘not at all confident.

— Employee Benefit Research Institute

In an effort to save as much as possible, Kathy plans on working part-time while in retirement as a consultant in her profession. This will allow her to supplement her income, contribute to a Roth IRA, and wait until she’s full retirement age, age 70, before drawing on her Social Security.

Reality Check: It Might Be Time to Revisit Your Retirement Income Plan

Funding your retirement today has changed dramatically from planning a retirement income a few decades ago. Today’s economic circumstances have created a new reality that requires a different approach.
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Retired and Lovin’ Every Minute of it

Congratulations on establishing a retirement income plan you can feel confident about. Here’s to your golden years! May you be able to live the retirement you always imagined—and have a solid retirement income strategy to pay for it.

Outliving your funds, leaving a legacy, and dealing with market fluctuations are all reasons why it’s important to have a retirement plan you feel confident about. Life can throw in unexpected events, but with careful planning, you may be able to put yourself in a better position for your golden years.

At this point in your life you’ve read and worked through the previous steps and have an idea of how much income you’ll need to fund your retirement. You’ve read about different types of retirement income sources, you’ve weighed your appetite for risk, and you’ve thought about inflation, your health, and other factors that might come up. So, what’s next?

Guaranteed Income Planning for Retirement

Explore the features, benefits, and drawbacks of the different income sources in retirement, and how to best leverage them as retirement income.

Retirement Income Sources

From annuities to Social Security and most everything in-between, here you’ll find clear, simple explanations of each type of retirement income—including the basics of how they work, pros and cons, and some important considerations.

Taxes in Retirement

You can’t plan for retirement income without taking taxation into account. Until the other inevitability comes to pass, the IRS will continue taking its share—and it can be a doozy.

A story about Edward and Carol

Planning on enjoying a comfortable retirement while holding on to their nest egg

Before retiring, Edward and Carol remained relatively optimistic about their future. They paid off their home, diligently contributed to their retirement accounts, and had affordable health care and life insurance through work. With a substantial nest egg, they both retired at age 63.

But as the market dropped, so did their 401(k)s—as much as 25 percent.26 Though they planned well, the recession, inflation, a poor return on their savings accounts, and the increased cost of health insurance have the couple tapping into their nest egg more and more each month. The reality is that they’ll likely be spending more in retirement than they did while working.

Your Retirement Reality Tip

Almost half of workers expect their 401(k) or 403(b) plan to be their largest source of monthly income in retirement, but that’s not the reality for most people.

— US News

With both of them now drawing Social Security, Edward and Carol realize that what they saved may not have been enough and they could outlive their money. With more going out than coming in, they’re not feeling confident about their retirement and will need to look at additional sources to supplement their income. For this reason, Edward and Carol moved some of their low interest savings accounts into annuities, and have been able to create a more reliable income stream that’s guaranteed for the rest of their lives.

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