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How Much Do I Have For Retirement?

How Much Do I Have For Retirement?

August 31, 2023

In a perfect world, we would all know the exact sum we’ll receive in retirement from all our different retirement savings accounts and income streams, and we wouldn’t lose a wink of sleep wondering if we’ll have enough to last our lifetime. Unfortunately, reality is different, but there are several avenues you can take to create a dependable income for yourself in retirement.


Social Security

Social Security has been a cornerstone of modern American retirement since its inception in the 1930s and acts as a foundational source of income for many. However, the amount you receive could be impacted by when you decide to claim. Most people are eligible to receive Social Security benefits at age 62, but claiming as soon as you qualify instead of waiting to reach your Full Retirement Age (FRA) could reduce your benefits in the long run. In the end, it is entirely up to your best judgment when you choose to claim your benefits, but discussing your options and how they fit into your overall plan with a financial professional could greatly help you in your decision. And, with reports that Social Security will be reducing benefits in 2034, it’s important to understand if this funding issue will affect your retirement income.


Pensions

They used to be the expectation, but nowadays pensions seem to be a dying breed in retirement income. A pension is a fund where money is added by the employer during the years of the employee’s employment. If you are one of the people who still receive a pension, you have two ways to withdraw the money: as one lump sum or as a stream of income. It is important to know the pros and cons of each withdrawal method based on your personal situation before you begin.

Fixed Rate Annuities

This type of annuity provides a fixed interest rate for a term period. These are guaranteed not to lose principal.

However, they do not participate in stock market appreciation. You can receive the interest provided for income on a yearly basis.

 

Fixed Index Annuities

A fixed index annuity uses your upfront principal (the amount you use to purchase the annuity) and then guarantees to pay you a fixed amount of income either for the rest of your life or for a set amount of time and is managed by an insurance company. There are some important things to keep in mind before choosing a fixed-index annuity. You have growth potential with an FIA, but it is usually capped or limited to a percentage of growth. So, for example, if the market goes up 20%, you might receive 6% (or whatever your specific annuity’s cap is) or only receive 60% of the 20% growth. On the flip side, as a fixed income stream, you will be able to know the amount of income you (or you and your spouse) will receive each year at any age you decide to make a withdrawal and you won’t lose your original principal investment if the market takes a downturn like it did in 2008 or 2020.

 

Variable Annuities

These types of annuities allow you to invest in accounts that participate in the market which allows you to receive market performance.  Many of these annuities provide riders that allow you to buy a protected growth rate of interest for a specific period of time on your deposited monies and then provide a lifetime percentage of income off of the guaranteed protected value for one’s lifetime.  Many also provide this benefit for a husband and a wife which is called the spousal benefit. These are complex investment instruments in nature and working with a licensed professional to determine which Variable annuity would be right for you is prudent and we feel is most appropriate.

 

Managed Money

There are many different platforms to choose from when is comes to managed money.  These type of investment platforms allow you to dial in on your risk tolerance and have an advisor build a portfolio that meets your risk tolerance. The type of investments that are purchased within this platform are bonds, Mutual funds, ETF’S, and stocks predominately. The key to this is to manage one’s rick tolerance. Utilizing a Registered Investment Advisor (RIA) will provide additional expertise to you the client. This is and investment platform that can provide income during retirement years.    

There are several decisions to be made when it comes time to act on your retirement income streams, and the pressure to choose the best option every time can easily feel overwhelming. We’re here to offer our professional guidance and opinion to help you have peace of mind. If you would like to continue the discussion about your retirement income more in depth, please feel free to contact our office at 732-695-2100 to schedule your complimentary appointment! We look forward to helping you!

 

Source: Retirement Income | Coming up with a plan | Fidelity´╗┐

Disclosure: Fixed Index Annuities: Index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an index annuity for its features, costs, risks and how the variables are calculated. Variable Annuities: There is a surrender charge imposed generally during the first 5 to 7 years that you own the contract. Withdrawals prior to age 59 ½ may result in a 10% IRS taxpenalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company. Investmentsub-account values will fluctuate with changes in market conditions. An investment in a variable annuity involves investment risk, including possible loss of principal. Variable annuities are designed for long-term investing. The contract, when redeemed, may be worth more or less than the total amount invested. Variable annuities are subject to insurancerelatedcharges including mortality and expense charges, administrative fees, and the expenses associated with the underlying sub-accounts. Investors should consider the investment objectives, risks and charges and expenses of the variable annuity carefully before investing. Theprospectus contains this and other information about the variable annuity. Contact Stephen W. Richman at 99 Corbett Way, Suite 103, Eatontown, NJ 07724 or (732) 695-2100 to obtain a prospectus, which should be read carefully before investing or sending money.