An endless parade of financial articles talks about saving enough for retirement and minding your retirement budget. But what about having more than enough money for your lifestyle goals? Just accumulating sufficient savings to last through your entire retirement is only part of the picture.

Decumulation, the Final (Retirement) Frontier

"The decumulation of assets in retirement is obviously a much more complex problem than accumulating assets before retirement," said Emmanuel Roman, CEO of PIMCO, in an interview with Advisor Perspectives. He continued:

"Because of its complexity, decumulation is unlikely to be solved with a single solution; we’re going to need to combine a number of good ideas from different corners of the industry to solve this problem. To make a significant difference, one should start with an important problem. A big one is how to protect retirees from sequence-of-returns risk, or the risk related to the timing of retirement.”

Roman then said that lots of research has shown “the devastation that can result from poor returns in the years just before, or just after, retirement. While episodes of poor returns may be less significant in the accumulation phase, an untimely transition to the decumulation phase risks completely derailing the retirement plan and drastically reducing the longevity of assets."

Sequence risk is the risk that you will take a big loss early on in the life of an investment portfolio. It's already bad when you have investment losses at the early start of your retirement. It's equally bad when you take losses just before you retire.

But if you are retired and taking withdrawals when the portfolio losses happen, the impact of those losses is compounded. By taking a withdrawal, you are already drawing down the balance of money in your portfolio from what it was prior.

If your portfolio also sustains a loss at the same time, the effects of both will come together to affect you. You will not only have to eat the loss, but you will further deplete the balance in your portfolio. So the timing of your withdrawals matters, especially in relation to how your portfolio performs.

When planning for retirement income, the devil is in the details. Once you are retired, you want to be sure that you have more than enough income for your lifestyle expectations.

One way to get a good grip on this is by mapping and estimating what you expect your future spending to be.

This can give you a high-level perspective of how much income you will need for your idea of a comfortable retirement. Everyone has a different situation. Because of that, the amount of annual income that you will need will likely differ from others.

That being said, you can still have more clarity in your income planning and decisions by seeing what others’ financial experiences are in retirement. One helpful metric in this regard is understanding which expenses can dominate your retirement spending.

Here are four expenses that can take a bundle out of your retirement money if you don’t plan for them. Having strategies for these costs, and your overall expenses, can go a long way toward keeping your retirement goals on track.

Paying the bills after you retire is quite different from during your career. After all, the income you receive will come from a variety of sources, as opposed as to earned income or a bimonthly paycheck.

Social Security, your own investment portfolio, a pension (if you are lucky), and maybe even part-time work can be sources of income that help pay for your retirement lifestyle.

The trick is therefore to maximize the total amount of income that you receive. But many Americans worry that they won’t have enough income during retirement to meet their needs.

The Alliance for Lifetime Income conducted a survey of 3,119 adults regarding their financial readiness for retirement. Eight in 10 (80%) of them expressed at least some level of concern that they won’t have enough income after they retire.

The survey revealed that 18% of the respondents were extremely worried about this. Meanwhile, 26% were “moderately” concerned and 36% were “somewhat” concerned about this issue.

Here are six key steps you can take now to avoid these concerns and maximize your income. You don’t have to wait until you are retired to start planning out the rest of your life.

When you are still working, a rock-solid financial plan will do wonders for helping you accumulate money for retirement. This strategy will laser-focus on growth and accumulation as top goals. With a financial advisor's help, you could stay on track with your plan and gradually build your savings for later years.

But things change as you near retirement. This period is called the 'retirement red zone' for a reason. It's a time when new planning is needed. Your financial plan will need to change gears, in some ways, in its focus from growth to retirement income.

This can be tricky in some cases, as today we face different challenges in retirement than those before us did. Longer living is one such issue now.

It's a very real concern for many retirees, as one study by Allianz Life found. In the study, six in 10 retirees ranked running out of money while they are still living as a greater fear than death itself.

Just like the plan for growing your money during your career, an income plan can help you maximize your lifetime cash-flow. In turn, you can better enjoy the hard-earned fruits of your lifetime of work.

Many years of hard work brought you to this point. Now it's time for your money to work and let you enjoy a comfortable, lasting lifestyle.

Earlier in your career, you focused on saving and growing your money so you could pursue your financial goals later in life. You might have worked with a financial advisor to do this.

Over the years, you socked away money in a retirement account and maybe even grew an overall portfolio. That meant having and following a strategy with a focus on accumulation and asset allocation. But as we reach the so-called retirement red zone -- that crucial period of a decade before and into retirement -- new planning is essential.

The income you earned from your career likely won't be the same once you retire. Then there is the challenge of making your money work for you.

How do you ensure that the income you draw from your portfolio is as efficient and tax-wise as possible? You want to be sure that your money lasts as long as you need it to in retirement!

The New Challenge in Retirement

One big challenge is transitioning from this concentration on accumulation and portfolio allocation to lifetime income and distribution planning in retirement. If unplanned, your income may be smaller year after year due to a heavy tax burden eating into it.

Your portfolio will have a bad year at some point, and the timing of your withdrawals might impact just how much income you have for years ahead. It's not only that which you have to be mindful of, too.

If you have a shortfall between the income you earned in your career years and what you expect for income in retirement, that can impact your ability to pursue your goals down the road.

All of this and more is why it's so important to make the switch from accumulation to protection and lifetime income planning focuses while you are in the retirement red zone. Here are five steps to take in order to help you make the transition.

Franklin Templeton's annual Retirement Income Strategies and Expectations Survey (RISE Survey) was recently released for 2020. This is the ninth year that the RISE Survey has been published.

The survey examines the concerns and attitudes of retirement savers. And it contains some very interesting data for retirement planners and savers alike.

In it, people of many generations share whether they think they are ready for retirement. The survey also covers what they are doing to accomplish their financial goals before they stop working.

As usual, this year's RISE Survey wasn't any different in the insights it drove home. Here's a roundup of some findings that might be helpful for your own retirement planning efforts.

As another year passes by, more people join the ranks of retirees. Since 2011, roughly 10,000 baby boomers have turned 65 years old each day, according to Pew Research. It predicts that trend to go on until 2029.

From second-act careers to volunteering and entrepreneurship, baby boomers are already reshaping the mold of retirement. And they are bound to keep redefining it, as record-breaking millions are set to leave the workforce.

With a new era of retirement living on the horizon, it’s prudent to take note of our retirement income planning strategies.

Will they provide reliable income streams and financial security for what could well be a decades-long retirement? Do they give a long-term assurance of you being able to enjoy your desired lifestyle? Or when it comes to these goals, does your income strategy have more of a question mark hanging over it?     

In their career years, many people work with a financial advisor to build their life savings and plan to continue so in retirement. One notable survey of 200 advisors by investment company Incapital shows how advisors are preparing today’s retirees for the economic uncertainties of tomorrow.

The survey's focus? What retirement assets these financial advisors were using to generate retirement income for their clients.

Calculating how much income you will need for retirement isn’t necessarily an easy task. Your health expenses will probably increase, but your mortgage payments may decrease or stop. Meanwhile, other expenses might continue to change over time.

Of course, you likely won’t have to deal with payroll taxes as much. Chances are you will also see expenses tied to employment, from transportation to a professional wardrobe, decline as well. But other costs may appear in retirement, from pursuing long-sought hobbies to traveling or spending more time with loved ones.

Although you may not even know where to start when trying to estimate how much retirement money you will need, there are a few rules of thumb that you can follow to help get you started.

Start With Your Current Lifestyle and Income

The first thing to look at is the amount of income that you need right now. This will give you a baseline to work off. Say your current lifestyle costs $60,000 of income per year to support. Your future retirement lifestyle will probably need an income that is somewhere near that level, unless major medical expenses arise (which can happen).

If you needed much more income than that to support your future lifestyle, you might consider delaying Social Security. Your benefits will accrue with each year you wait. If you kept on working, it would also give you more time to invest and grow your nest egg. Ultimately, that would help you be even better prepared for the transition to a secure and comfortable retirement.

Since your current income supports your present lifestyle, it's a natural starting point to estimate your retirement income needs.

Nobel prize winner William Sharpe calls it the “nastiest, hardest problem in finance.” What is that? Decumulation, or the process of building a dependable lifelong income stream from your retirement savings.

It’s no wonder millions of Americans are asking if they will have enough money to retire comfortably. Between rising health costs, multiplying risks, and the real possibility of “lifelong” referring to what can be a very long time, there are multiple priorities to juggle as you build a personal retirement strategy.     

Many Americans worry about whether their life savings and income will last for the rest of their lives, as a recent survey found.

In the poll of 3,119 adults, aged 25-74, the majority of retired individuals (71%) felt confident that their savings and income would last. Meanwhile, just 42% of working-age Americans said they had that confidence.

The survey findings were published by the Alliance for Lifetime Income, a non-profit funded by life insurance carriers and asset managers to educate the public on annuities.

Today, Americans bear more financial responsibility for their retirement than ever.

The days of receiving monthly pension checks are gradually fading. According to Willis Towers Watson, only 16% of Fortune 500 companies were offering pensions to new hires in 2017, down from 59% of firms in 1998.   

Defined-contribution plans like 401(k) accounts are taking their place. And this shift is huge. Now, people must count on them, IRA assets, and personal savings to create income streams that might need to last for a very long time.  

How long? Potentially decades. The Society of Actuaries estimates that among married couples who are 65, there is a 72% chance that one spouse will live to 85. Not just that, one of them has a 45% chance of reaching age 90.

In other words, someone may spend as much as one-third of their life in retirement. In the face of that, how do you ensure your nest egg lasts for the rest of your lifetime?

While the answer is different for everyone, a new study offers some fresh insights. The Georgetown University Center for Retirement Initiatives partnered with Willis Towers Watson to explore different ways to generate income in defined-contribution retirement plans.  

Their findings show how various lifetime income options, whether as a combination or as stand-alones, can help retirees better enjoy lifelong financial confidence.

Editor's Note: This article presents some simple ways to strengthen your income confidence in retirement. As you read about how you can make your money last in retirement with different income strategy options at your disposal, check out this debate by two economists on the security of the $3 trillion Social Security trust fund. It's just another personal reminder of how our personal financial security is ultimately up to each of us.

With new swells of Americans turning 65 each day, it’s one of the most-pressing questions in financial planning: How can I make my money last in retirement?     

Today’s retirees aren’t just sitting back. As they live longer, they are delving into new opportunities with full steam.

Second-act careers. Entrepreneurship. Volunteering for personal causes. Cross-country tours. Worldwide travel. All of this is breaking the boundaries and redefining how we think of aging.

But the increasing lifespans also bring new trials. Longevity risk and other risk hazards compound with additional years of retirement living.

One of the biggest challenges is creating a dependable stream of monthly income for cash-flow needs. And not just that, but a monthly income stream that you might need to count on for a very long time.

While a one-size-fits-all answer won’t work for everyone, new research tees up some fresh insights on how to make your money last as long as you might need it.

Three retirement experts, hailing from the Stanford Center on Longevity Studies and the Society of Actuaries, completed a study on retirement income strategies. Using a variety of forecasting techniques, they tested nearly 300 strategies in order to see which one would best allow retirement investors to generate income safely and efficiently.

Their findings were aimed at middle-income households – or among investors with some portfolio assets (but not over $1 million in asset values).    

Determining how much money you need in retirement is both a mathematical and a personal issue. Like a fingerprint, the answer is unique to you and your spouse.

That is why it's so important to discuss your 30-year retirement plan early – or in other words, definitely some time before you actually retire. And just not early, but often. This approach will help ensure you and your spouse are on the same page.

Here are a few guidelines you can use in your determination of how much money you need in retirement for a comfortable lifestyle.

If only retirement income planning were as easy as answering one question: "What is your number for lifetime retirement security?"

That would be nice if retirement boiled down to just one number. But this oversimplifies what it takes to enjoy a secure retirement because, in truth, it requires a customized income planning approach.

Why? Because determining how much money you need in retirement is just as much a personal question as it is a mathematical one.

Just think about your goals and what you might need financially to make them happen. Do you plan to travel? To begin a career 'second act' by getting involved with entrepreneurship or consulting? To donate time and resources to causes that are near and dear to you personally?

Bottom-line, everyone will have different income needs. So, here are five important tips to help guide you through your retirement income planning process. You can also further explore some topics by checking out the other SafeMoney articles linked to throughout this piece.

Congratulations! You have accumulated a nice “nest egg” – or a large lump sum for your retirement. But, believe it or not, just having a hefty portfolio and other assets isn't enough to ensure your retirement security.

There is also the matter of making sure your money lasts for the rest of your lifetime. A retirement income plan will go a long way toward helping you enjoy a comfortable retirement lifestyle.

In other words, building up retirement capital and investing your way to a large portfolio size isn't enough. It's just as important to know what you will do with the money you have accumulated through the development of income and distribution strategies.

“What can we do to not run out of money in retirement?” and “Will we have enough money to last as long as we are retired?”

Those are the two big questions which nearly all retirees have. For most of us, though, they are top concerns that what we all worry about as we approach retirement. Then we think about them quite often as we move through our retirement years.

Good news, however. To help alleviate the worrying and wondering, the solution is -- quite simply -- to have a PLAN.

“Nothing is certain but death and taxes,” as the old saying goes. And while the question of spousal survivorship is an uncomfortable topic, it’s far too important to put off.

No one lives forever. What will happen when you or your partner pass away before the other? In that event, what is your plan?

To help you prepare ahead of time, here are some general guidelines for developing and managing a long-term retirement and financial survivorship strategy. They stress the importance of “income continuity,” or having uninterrupted income streams in place after the first death in a couple.

Thanks to progress in healthcare and technology, you may expect to have a long retirement. But living to 100? While a lofty milestone, it’s not as out of reach as it may seem.

In 2014, U.S. government statisticians found that the number of people reaching age 100 had increased 40% from four years prior. And by 2050, the “100 and up” crowd is expected to grow to 3.68 million people worldwide.

Given the reality of lengthening lifespans, it’s no wonder why outliving retirement money remains a top concern. In a 2017 Allianz Life survey, almost two-thirds of surveyed Americans (63%) said they worried about running out of money in retirement more than death!

Financial planners and advisors call this chance of outliving your money a “longevity risk.” Building a well-defined retirement strategy will help you guard against this hazard, not to mention enjoy more financial peace of mind in your golden years.

Building a Financially Confident Retirement Lifestyle

A rock-solid plan will lay out how you maintain your lifestyle with the retirement income and assets at your disposal.

Whether someone lives to 100, goes beyond, or simply faces the prospect of a long-time retirement, the importance of managing your income and expenses also can’t be overstated. And it’s equally important to recognize that income alone doesn’t solve all problems in retirement if you don’t have a plan.

To help you plan for these golden years on the expense side of the ledger, we have assembled some general guidelines. For illustration, here’s an idea of typical expenses you might expect as you go through the three stages of retirement:

• Go-Go, 60-75: Just starting out, fit as a fiddle, traveling and living the dream
• Slo-Go, 75-90: Grandkids are growing up, may be time to consider selling the house or downsizing
• No-Go, 90+: Hung up your traveling shoes, every day is a blessing
  
  

Do you know what the average retirement income is in the United States? A typical retiree household brings in $49,097 annually before taxes. The Bureau of Labor Statistics (BLS) defines retiree households as those led by someone who is 65 or older.

And what about their spending? On average, a retiree household spends roughly $49,542 per year, which is slightly more than the average retirement income mentioned earlier.

Meanwhile, the average annual pre-tax income for all U.S. households is $73,573. And as for household spending across all age groups, the BLS estimates average expenditures to be $60,060 annually.

The mantra for success in real estate is "location, location, location." For success in retirement, the canned phrase becomes "income, income, income."

 When you retire, you no longer have a salary from full-time employment. Or maybe you were an entrepreneur, so you brought home the bacon in other ways, such as business ownership. Either way, your income situation will probably change.

A key factor for living well is how much money you can expect to receive every month from your own unique mix of retirement income sources. However, some Americans may fall short of the income they need for their golden years. Consider research done by the Employee Benefit Research Institute, for instance.

In one study, center researchers found that as many as 40% of baby boomers in the study may run out of money in retirement. According to the Employee Benefit Research Institute’s Retirement Readiness Ratings, released in 2014, only 56.7% of “early” baby boomers (born from 1948 to 1954) and 58.5% of late boomers (1955 to 1964) will have the financial resources required to meet their retirement expenses. The remaining retirees would struggle with income that falls short of their needs.

The EBRI’s model indicates that a household is considered likely to run short of money if its assets can’t meet "minimum retirement expenditures." This is a combination of expenses from the federal Consumer Expenditure Survey (as a function of age and income); some health insurance and out-of-pocket health expenses; and expenses from nursing-home and home-health care.

Remember those television commercials from a decade ago showing people walking around town carrying a giant orange “retirement number” under their arms?

That is what everyone thought a retirement plan should look like. A big number that you divvy up and draw down during your golden years. With that strategy you are taking 100 percent of the risks many retirees may face, from market volatility to longevity risk to healthcare risk.

Modern thinking has taught us that, as the average life expectancy continues to climb (Could age 90 be the new 70?), our real concern should be more than a magic number for retirement savings. It should be creating a retirement income plan that ensures we will have income in retirement that lasts as long as we will.

Over the years, you and your spouse have probably had many wonderful conversations about your retirement dreams. Maybe you talked about traveling to exotic destinations. Maybe you have always wanted to move closer to the grandkids. Or you might have dreamed of taking up those elusive hobbies neither of you had quite the time to pursue.

Of course, there are many things to discuss for retirement so you can prepare for a retirement lifestyle that you both find meaningful. One thing you may not have discussed, or agreed on, is how to harmonize your grand plans with your retirement income plan. Because not only will you need money to fund that retirement wish list… You will still need income to support your everyday needs, not to mention healthcare and other potentially costly unknowns.

What will those needs be? That seems to be where the disagreement begins. According to a Fidelity Investments Couples Retirement Study, almost half of the couples surveyed (47 percent) disagreed on how much they needed to save to maintain their current lifestyle in retirement.

One reason may be the small percentage of couples who have taken time to develop a detailed retirement income plan… just 21 percent, according to Fidelity.

Everyone breathed a sigh of relief when the government shutdown ended this month. As InvestmentNews noted, bond yields are in flux, and the shutdown could have made things worse.

But while that ship has sailed, other risks still loom on the horizon. Industry analysts point to changing rates overseas, inflation, and predicted Fed rate hikes at home as potential bond market movers. A report from Deutsche Bank lists them, among other concerns, as 30 market risks to watch in 2018. And what's at the top of that report list? "U.S. inflation moving higher in 2018 Q2."

If you are among the growing numbers of Americans reaching their retirement savings goals, congratulations!

According to the Center for Retirement Research, 50% of working-age Americans report they could maintain their pre-retirement standard of living in retirement, as measured by the Center’s National Retirement Risk Index. This is a 2% improvement over the center’s previous measure of retirement readiness in 2013.

Thanks to rising home values and stock market all-time highs, the account balances of employer and individual retirement savings plans are flush. So, now that your retirement savings goal is achieved, what should you do next to enjoy the retirement you have worked hard for over many years?

Achieving financial security isn’t an easy task. The dynamics of retirement income planning have evolved. It used to be that retired households could rely upon Social Security and personal pensions for the income they needed.

But that has changed. Now Americans shoulder more individual responsibility for their future income security. Also, life expectancies are on the rise. The challenge becomes ensuring our money will last for a retirement lifetime.    

As you create your own retirement income plan – or consider potential changes to your current plan – here are six risks to retirement income to consider. Keep these potential pitfalls in mind as you formulate your own strategy.