Have You Planned for Your Retirement? Part 2

As outlined in Part 1, given all the factors that need to be considered in order to plan for your retirement, there is really no way to determine what is the exact right amount of money. There are, however, certain things that you can do to position yourself in the best possible way.

The process by which we help people plan for a secure retirement, as stated in Part 2 of our Financial Organization series, is to set up proper, foundational financial plans. You must have the proper foundation products:

• Car, home, and liability insurance to protect the nest egg, the portfolio, and/or the savings
• The right protection
• Disability income insurance, if we are still accumulating money
• The right health insurance
• The right long-term care solution for your family
• Make sure that your social security is set up correctly and that you are making the best choices as to when to take social security.
• The right wills and legal documents in place
• The right titling of assets
• Life insurance to protect your family, especially during the accumulation period so that if you don’t reach the amount of savings that you need, your spouse will have adequate income for their retirement
• Life insurance after retirement so that assets can be consumed but legacy and estate values can be left intact

Once that foundation is set up, we need to create ways to guarantee income for life, developing an asset allocation that includes strategies that will protect you from the potential of running out of money during your lifetime. How do we do that? We do that through guaranteed lifetime income annuities.

For example your projection is that you need $100,000. Let’s say you have $25,000 guaranteed from Social Security, and you have a pension from your company worth another $25,000. That’s $50,000 of the $100,000 you need.

At this point, you could do one of two things:

• You could pull income from your investments for the other $50,000 or alternatively,
• You can take some of your investments and put them into a guaranteed lifetime income annuity.

Let’s say you gain another $25,000 a year from that product. Now you have $75,000 guaranteed for income, which would require only withdrawing $25,000 from your investable assets, putting a lot less pressure on those investments.

There is a constantly changing rule of thumb as to how much you can withdraw out of your portfolio. What was commonly thought as wisdom was a 4% number, so if I had to generate $40,000 out of my investment portfolio, I would need to have $1 million in value. By creating these guaranteed lifetime income annuities as part of your retirement plan, your retirement portfolio will have a higher percentage of guaranteed income. This might create less risk and volatility of your investment portfolio, potentially increasing the likelihood of a successful retirement.

To learn more about retirement planning, give us a call or check Swanwealth.com