Income for Life: the Financial Blueprint to a Lasting, Worry-Free Retirement

Will you have enough income for life for your expected retired lifestyle? The idea of a fulfilling retirement sounds great, but in our 50s, it suddenly becomes more than just a distant dream. Just the thought of retirement starts to feel like a tangible reality.

It’s the time when we can really think about life after our careers, the years in which we can finally enjoy the fruits of our life’s work. To make the most of it all, you need to ensure that you have sufficient income for life, or in other words, enough money to last however long your retirement might be.

In this article, we will explore what those in their 50s, near retirement, and in retirement should know about income for life strategies. We will discuss how to create dependable lifelong income streams from retirement investments and savings.

The Importance of Income for Life

Retirement is typically presented as a time of relaxation and enjoyment, but it’s also good to remember that retirement can span decades. To sustain a comfortable lifestyle for that period, people need a reliable income source that will last as long as they do. This is where the concept of “income for life” comes into play.

What Is Income for Life?

Income for life, as the name suggests, is a stream of money that continues to flow throughout your lifetime. It ensures that you have a steady source of funds to cover your living expenses in retirement, even if your golden years last for decades.

The goal is to make your money outlive you, rather than the other way around. There are a number of strategies that can be designed to ensure that you have enough income for life.

Some lifetime income strategies rely on contractual guarantees to pay you income for your lifetime. Others rely upon sustainable withdrawal rates. Still, some strategies use a combination of managed withdrawals and guaranteed income sources so that you have predictable, ongoing retirement cash-flow.

Retirement Strategies for Those in Their 50s

When you are in your 50s, retirement may still seem a bit distant, but it’s just around the corner. This is the perfect time to assess your financial situation and fine-tune your retirement income strategy.

1. Assess Your Retirement Savings

Start by taking a close look at your retirement savings, including your 401(k) plan, IRAs, and any other investment accounts and retirement-saving vehicles. Are you on track to meet your retirement goals? If not, consider increasing your contributions.

2. Diversify Your Investments

Diversification is a key strategy for managing risk in your retirement portfolio. Explore how you can spread your investments across a mix of assets, including stocks and bonds. Your asset allocation should make sense for your risk tolerance, personal situation, and long-term financial goals, so it won’t look the same for everyone.

If you would like the prospect of a guaranteed stream of income for life in a few years or at some time from now, consider putting some money into an annuity. That will give you time for your money to grow in your other holdings, and the longer that you wait to turn on the income stream from your annuity, the bigger that your annuity payouts will be.

3. Consider a Financial Advisor

If pre-retirement planning feels too time-consuming or even overwhelming, consider looking for a financial advisor. They can help you create a personalized retirement plan tailored to your current financial progress, long-term goals, and risk tolerance. You can also explore with your advisor steps that you can be taking now toward lasting financial security.

4. Pay Down Debt

Work on paying down high-interest debts like credit card balances and loans. Reducing your debt burden before retirement can free up more of your income for retirement expenses.

Nearing Retirement: Strategies for Reliable Income for Life

As you start getting closer to retirement (usually in your late 50s and early 60s), it’s time to transition from building up wealth to generating income. Here are a few steps to think about at this point.

1. Understand Social Security

At this stage, it’s good to know about your options with Social Security. You can start claiming them as early as age 62, but waiting until your full retirement age (usually between 66 and 67) will you let claim your full Social Security benefit.

Delaying benefits even further can increase them even more. You can wait until age 70 to take your benefits, after which there is no advantage in waiting any longer. There are many possibilities for taking Social Security – some claim as many as 567 possibilities – so it’s crucial to do it right for your situation. That can mean maximizing your benefits if your family history suggests a long retirement or claiming them early if your medical history suggests that retirement may be shorter.

2. Forecast Your Spending and Income Needs

If you haven’t done it yet, take some time to estimate what your retirement expenses and income needs will be. Why is this important? Because if you don’t have a snapshot of what your retirement might look like, how can you know where you are financially and if you need to take any further steps toward your goals? Getting estimates of what your expenses and income needs is crucial.

Not sure about how to do that? Use your current spending patterns and how much income you are basing your spending on now as clue-ins. They show what your future expenses may be, indicate what your financial priorities are, and you might be able to eliminate some expenses in future spending that you believe won’t be there.

Once you have an idea of your future expenses and income needs, consider making projections for a long-term retirement. For length, you might see how much those expenses will be over 30 years, adjusting for inflation each year, and seeing how much you need to have saved for retirement. Your financial professional can be of great assistance here.

3. Create a Withdrawal Strategy

Determine how you will withdraw money from your retirement accounts. A common rule of thumb is the 4% rule, which suggests withdrawing four percent of your portfolio’s value annually, adjusted for inflation. That being said, the 4% withdrawal rule may not always be effective based on future market conditions and in today’s landscape of ever-changing interest rates.

Because of that and other reasons, it’s wise to work with a financial advisor to come up with a sustainable and well-thought-out withdrawal plan tailored to your specific circumstances.

Consider including in your withdrawal strategy a guaranteed income vehicle so that you can maximize your lifelong income. Which brings us to the next point…

4. Explore Annuities for Guaranteed Payouts

Does the prospect of guaranteed income for life sound good? Consider incorporating annuities into your retirement plan so that you have your essential living expenses covered. Annuities provide regular, guaranteed payments for life, helping to ensure you won’t outlive your savings. They are the only type of financial instrument that can do this, period.

There are various types of annuities, so it’s crucial to understand their features, pros and cons, and contract fees (if any) before committing.

5. Don’t Forget About Healthcare

As you move along in retirement, healthcare expenses often rise. Long-term care needs can also arise, and they have their own high price tag. The best way to prepare for these scenarios is with proactive planning.

Make sure your retirement budget accounts for potential medical costs, including insurance premiums, deductibles, out-of-pocket health expenses, and long-term care.

In Retirement: Keeping the Paychecks Going

Retirement is finally here, and it’s time to enjoy the fruits of your labor. However, there is still the ongoing need to manage finances in post-retirement so that you can ensure your income lasts as long as you do. This is where proactive planning and income for life strategies that you put in place before retirement will be helpful.

If you haven’t explored your options for generating income for life yet, it’s a good idea to talk to your financial professional now about the possibilities. It’s never too late to discuss what you can do in the present for your long-term financial wellness.

1. Stick to Your Budget

You mapped out projections for future spending and income needs. Now it’s a matter of sticking to your plan.

Your monthly retirement budget is an important part of this. In your budget, you may wish to distinguish between essential expenses and spending that isn’t as frequent, such as vacation, travel, or charitable giving to causes that you care about.

We can think of the budget as your monthly guidemap. It helps you control expenses and ensure your income covers your needs. Regularly review your budget and adjust as necessary.

2. Manage Your Investments

Your financial plan needs to generate income in retirement. But don’t forget about growth so that you can keep up with inflation and also ensure you have enough income throughout retirement.

Keep an eye on your asset allocation, making changes as needed in order to align with your risk tolerance and income needs.

3. Stay Informed

Keep yourself informed about changes in tax laws, Social Security rules, and retirement account regulations. Staying updated will help you make informed decisions that can positively impact your income.

4. Follow Up Regularly with Your Financial Professional

While staying informed is a crucial financial part of retirement, an experienced financial professional will stay abreast of all of this and be well-versed in these matters from helping other clients. Take advantage of their experience and knowledge.

Have at least annual reviews of your financial picture and do a temperature take on where things stand. Have any life changes, such as new grandchildren, happened since you last met? Are any beneficiary designations on any accounts needing to be made? Has something happened health-wise or in another area of life where you need financial adjustments to your plan?

Don’t be afraid to ask questions or discuss any concerns you have with your financial professional. This will help you maximize the fruits of your life’s work and enjoy your retirement to the fullest extent possible. They are there to help you in that goal.

The Bottom Line: Having Income for Life and Enjoying a Lifetime of Financial Comfort

Planning for retirement isn’t just about having enough money for your golden years. It’s about creating a dependable income stream that lasts a lifetime. Whether you’re in your 50s and fine-tuning your strategy, on the cusp of retirement, or enjoying your post-career years, these strategies can help you navigate the complexities of retirement income.

By assessing your savings, diversifying your asset holdings, and seeking seasoned financial guidance when needed, you can set the stage for a comfortable and financially secure retirement. Understanding Social Security, creating a well-thought-out plan with income for life strategies, and adjusting as needed are essential steps as you approach retirement. Once you are retired, ongoing management of your plan, check-ins with your advisor, and staying informed will help ensure your lifelong income streams remain reliable.

Retirement is a journey, not a destination. With careful planning and the right income for life strategies in place, a fulfilling and confident financial future is well within reach. If you are looking for a financial professional to help you in this way and with other retirement questions, many independent and experienced financial professionals are available here at SafeMoney.com.

You can connect with someone directly by visiting our “Find a Financial Professional” section, looking at financial professionals available to you, and requesting an initial, complimentary appointment. Feel free to ask any questions and discuss whatever is on your mind to explore a possible working relationship. If you want a personal referral, please call us at 877.476.9723.