10,000 Baby Boomers turn 65 every day. For the most part, this single largest segment of our population is not ready for retirement.
Here are 3 Retirement Questions You Need Answered Today.
1. How much retirement income do I need?
Estimates range from 66% to 80% of current income. If your goal is to maintain your lifestyle, which I repeatedly hear, you will need an amount equal to or greater than your current income. That may surprise you, but it shouldn’t. Because most, if not all, of your retirement assets are in tax-deferred accounts, your retirement income will be laden with taxes: federal, state, and local. Factor in inflation and the answer is clear. To maintain your lifestyle in retirement you will need more income, not less. The long-term historical average for inflation in the U.S. is 3.80% and trying to project future income-tax brackets is a crapshoot. Factoring a 3-8% annual increase into your retirement income is a good place to start.
2. How long will I need my retirement income?
You retire at age 65 with 1 million dollars, live modestly on $50,000 per year, and die at age 75. If you knew you only had 10 years to live you could have taken $100,000 annually! The problem is we don’t know when we are going to die. Why do advisors illustrate retirement income between ages 65 to 95? Because that is what they have been trained to do. Why not incorporate a longevity report into the process? With the answers to a few medical questions, the probability of when you will die can be estimated. If you have a 10% chance of living to age 72, why not enjoy the time you have left? And, if you have a 10% chance of living to age 100, you can plan accordingly.
3. How do I make sure I don’t run out of money?
Without a doubt, this is one of the most pressing concerns on your mind. You have a 10% chance of living to age 72. What happens if you live to age 75 or 80? Some of you have a company pension that will pay over your lifetime, maybe over both your and your spouse’s lifetime. Most of you will receive a Social Security Benefit that will also pay over your lifetime. Chances are you cannot support your desired retirement on these two income sources. This is where an annuity can help. Annuities get a bad wrap but they shouldn’t. Not all annuities are created equal but the one thing an annuity offers that no other investment can is guarantees. That’s right. With an annuity, you can take your 401(k) balance or IRA balance and convert it to a stream of income guaranteed for life. Think of it like your own personal pension. And just like that, you have prevented yourself from running out of money during your lifetime.
Don’t want to work longer, save more, or live on less? Go to www.jondaknows.com to get your retirement back on track!
Download 3 Retirement Questions You Need Answered Today