Many people today no longer have the benefit of depending on company provided pension plans to supplement their retirement income. The responsibility has shifted to the individual to utilize other financial vehicles to create enough savings to live a stress-free retirement.
I want to discuss “How to Live a Stress-Free Retirement”.
The reason I chose this topic today is because the retirement landscape really has changed and evolved over the years.
For example, my father was an electrician in a plant. When he was working, his company paid into a pension for him, and now pretty much all of his retirement income was supplied by a pension that he never outlived.
Fast forward to today, my brother’s works for a large Home Improvement box store, he has a 401(k).
The savings is now on him and him alone.
Companies are not supplying as much retirement assistance, so it’s up to us and these generations that are approaching retirement to really take it upon ourselves to make sure we live, a stress-free retirement.
Then vs Now
We are going to compare then versus now.
As you can see here in the retirement income pyramid, is that pensions used to be the lion’s share of retirement income.
Your company pays into a pension as a company-sponsored pension, and then they supply you a guaranteed income for life.
Then Social Security became a larger amount, as different social security reforms were added over time.
Savings used to be the smallest amount of retirement income for those pre-baby boomers, and some of the earliest baby boomers.
Fast forward to now, and the generations that are retiring in the future, and some that are even retiring now, as you can see, their retirement income pyramid is inverted.
The pensions are a smaller portion of retirement income. Fewer companies provide pensions to their employees today.
It’s going to be a lot more of your responsibility as workers to save for our own retirement.
Social Security will hopefully be there for most of us, but as you can see, savings will be the lion’s share of our retirement.
When we say savings, it’s not just the checking or savings account.
Today’s savings are typically in a 401(k), an IRA, or some sort of professionally managed account that’s in the stock market or bond portfolio or mutual funds.
Okay, so that’s the then and now of the retirement savings pyramid.
Then = Assets
Let’s discuss something that’s a little bit different, a little bit outside the box.
I’m going to go ahead and say a sentence that might make you think a little bit differently.
Believe it or not, there’s people that think assets ruin retirement. Let me explain.
You’re probably thinking, “How is that even possible? I increased my nest egg, by doing a really good job saving. I have all these assets. Now I’m ready to retire”.
But believe it or not, assets cause stress in retirement, reason being, like we said, those assets are typically still invested in the market.
When your money is in the market, you’re subject to more risks in retirement, and one of those major risks is stock market volatility.
Seeing the stock market go up and down can affect the income that you have in retirement. If you’re not working anymore, losing your life’s savings when you need it to live on, that is stressful. It can also cause you to make panic decisions locking in those actual losses for real.
Which leads to one of the biggest fears in retirement, the fear of running out of money. To most retiree’s this is a greater fear than death.
If your married there’s a 50% chance that one of you will live to the age of 90. Your retirement dollars must go a long way before your journey ends.
A retirement dominated with asset investment can ruin your retirement with a wall of constant worry.
Now = Income
When you break it down, what we want from those accumulated assets is income. Don’t you agree, more guaranteed income would make for a more stress-free retirement. Money that you know will never run out.
Picture yourself walking down to the end of the driveway in your slippers, pick up the newspaper, and on the first day of every single month, you’ve got what we call mailbox money.
That paycheck comes every single month, on the first of the month, and that money is protected, and it’s there forever, and you will not outlive it.
If you were to pass away, your spouse would get that money as well.
Again, I would say that income makes for more of a happier retirement than assets because your stress level would go down.
Lifetime Income Annuity
Then the question is, how do we turn those assets into income in a safe and efficient way?
Well, the answer here is we create a lifetime income annuity.
An annuity is basically something that supplies you an income for life that you will not outlive.
One of the main ways to do that is to turn those assets into income by using an insurance company.
The insurance company would supply you an annuity.
And just so you know, there’s a lot of different types of annuities out there, so what I would recommend working with Excalibur Life Insurance & Annuity Solutions, Inc.
As your trusted advisor I really pick the right type of annuity for you, whether you’re ready for retirement now, whether you want to defer five years and then start income, whether you want to do some late-stage income planning, there’s all shapes and sizes of annuities.
Rely on Excalibur Life Insurance & Annuity Solutions, Inc as your trusted advisor to help you decide what the best type of annuity would be best for you.
When you send those assets to the insurance company, they would set up a stream of income for you that you would never outlive.
We can turn some of those invested assets into guaranteed income.
I know this was a very high-level view, so that’s why we would recommend working with us, but keep in mind that the guaranteed income is going to be a large portion of your retirement income. You will still have money invested in the marketplace. But with guaranteed income as your anchor, you can ride the ups and downs of the stock market without worry because you don’t need that money today because your guaranteed income is there paying your monthly living expenses year in and year out.
This will allow you to selectively withdraw money from your stock market investments when the stock market is growing. When the stock market is negative your now in a position to wait and let it recover before drawing again. Does this make sense to you?
It’s really on you to make sure you do a good job, not only saving during our working years, but turning some of those assets that you accumulated into income, and doing it in a safe way.
If your considering guaranteed income as part of your retirement strategy call me, Mel Samick. 888-839-3536. With 47 years in the financial services industry, I can help walk you down the path to a happy and stress-free retirement.