3 Tips for Greater Lifelong Income Certainty, No Matter What the Market Does

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Following the election of Donald Trump as President-Elect, the market has been on the rise. On Tuesday, December 20, 2016, the Dow Jones Industrial Average nearly hit an all-time high. At session-high for the day, the Dow came within 13 points of hitting the 20,000-point benchmark – which would have been a new, all-time growth benchmark for the index.

In fact, with a strong, days-long market rally, the Dow has notched 17 record closes since the election. Other indices also have been on an upward trajectory, for one the S&P 500 set a new closing record on Wednesday, December 7. Financial pundits such as economist Mohamed El-Erian have pointed to growing investor optimism over anticipated Trump-administration economic policies as a growth driver.

For Americans aged 50 and over, all of this is excellent news for retirement portfolio values. But as historical data shows, market growth doesn’t happen in a vacuum or linger on forever. This is a critical point for people nearing retirement – particularly those within five to ten years of it. With life expectancies on the rise, one question is how they will pay for what may be 20-30 years of a retired lifestyle.

Income certainty is an important retirement concern, and older Americans are considering what steps they can take now for financial security. If retirement is in the near future for your household, here are some quick year-end tips to consider for lifelong income certainty, no matter where the market is.

Quick Tips toward Achieving Market-Protected Income Security

Evaluate your present financial strategy. A year-end financial review will help clarify whether your existing portfolio allocation aligns with your needs and objectives. For people nearing retirement age, now is an optimal time to plan while the market is strong. If retirement is a near-term milestone, a transition from a growth-focused financial strategy to one emphasizing wealth protection may be worth consideration.

After all, retirement is a timeline of “decumulation,” or when people draw money from income sources they have built up over many years. From a planning standpoint, it makes sense to look for ways to preserve life savings so they can be tapped for dependable income streams in retirement. Ask yourself: Do you currently have a wealth accumulation strategy in place? Or is your strategy tailored toward preserving what you have accumulated?

If you will retire soon, consider securing the “safe money” portion of your retirement portfolio. In retirement planning, “safe money” is the money you cannot afford to lose. For many people, that encompasses money to pay for their retirement lifestyle. Monthly living expenses – from mundane costs such as housing and clothing to more discretionary expenditures like hobbies – form the financial underpinnings of day-to-day activities in retirement.

A solid way to consider this is evaluating your financial circumstances in terms of risk management. Ask yourself, is the money you will use for these expenses protected from risk factors like:

  • The stock market falling or correcting
  • Your taxes increasing
  • Bond values dropping
  • Your tax liability rising

Working with a credible, knowledgeable financial professional who understands income planning can help you identify possible ways to secure this money.

Does your strategy account for future income streams? We mentioned earlier how wealth protection can be an important focus for people near their retirement age. But the near-term isn’t the only timeline which should be planned for. A well-thought-out financial plan will consider future income needs, as well.

Now may be a time to assure you will have dependable, lifelong income streams in place, with the market being strong and interest rates on the rise. For many people, those income streams likely will consist of:

  • Social Security benefits
  • Possibly pension payouts
  • Money drawn from a retirement portfolio and other sources

Predictability and reliability are two important values in income planning outcomes. If it truly makes sense for your financial profile, guaranteed insurance-based strategies which assure lifelong, permanent income and protect your money from down-markets might be a consideration. Seek out a qualified retirement income strategist to evaluate your circumstances and see if such planning approaches might align well with your profile.

Need Help with Your Financial Retirement Planning?

Many Americans have found financial confidence and peace of mind in securing the fixed-income portion of their expenses with permanent, lifelong income strategies. This means sitting down, developing a comprehensive plan for your retirement lifestyle, determining how you will pay for your preferred lifestyle on a monthly basis, and what income vehicles you will use to fund it.

If you're ready to plan for your retirement financial and income goals, can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Author: Ian

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