Most American workers planning for retirement today are facing an important problem that retirees of the past didn’t have to worry about – a retirement without a pension. Workers today will have to rely on a combination of Social Security benefits and savings to meet their income needs when they’re no longer working and it will be important to consider how those two pieces of their retirement plan can work together to maximize income.
The 2017 Retirement Confidence Survey from the Employee Benefit Research Institute finds that the share of current workers who feel very or somewhat confident about having enough money for a comfortable retirement has declined to 60% and only half the workers surveyed felt that were doing a good job of preparing financially for retirement. (ebri.org March 21, 2017)
When corporations moved from pension benefits to 401(k) plans, workers had to become the financial planner, investment manager and actuary in order to successfully plan for retirement income. However, most workers found they were ill-equipped to act in those capacities and met the challenge of preparing for retirement by saving inadequately, investing either too aggressively or too conservatively, and not focusing on how they will generate income that may have to last 30 plus years. Fortunately, a new study from the Stanford Center On Longevity, shines a light on strategies that can allow workers to use their retirement plans and Social Security to effectively provide lifetime retirement income similar to a pension.
Social Security benefits provide the foundation of a lifetime income plan because they protect against longevity risks, inflation, poor investment performance and the premature death of a spouse. By optimizing Social Security benefits and combining those benefits with annual Required Minimum Distribution’s (RMD) from retirement savings, a worker can generate a pension like stream of income that will last throughout their life.
Let us help you plan now in order to maximize your lifetime retirement income.