What is Guaranteed Retirement Income?
People say there are no guarantees in life, but that isn’t necessarily true. Wash your car and it’ll rain the next day. Wrestle a child into a snowsuit and he’ll immediately need a bathroom. It seems like it never fails. Then there are good guarantees. Like guaranteed income in retirement. If you put together a retirement plan with financial instruments that provide a reliable stream of income, you’ll be able to enjoy your non-working years with greater confidence.So, where do you find guaranteed income in retirement? There are five main sources:
SOCIAL SECURITY
You already knew about this one. But do you know what Social Security benefits you can expect when you retire? If not, use the Social Security calculator. Knowing your number is essential to figuring out your likely income gaps — more on that later.
PENSIONS
Employer-paid retirement accounts are rapidly becoming extinct. If you have one, consider yourself fortunate.
BONDS AND CDS
These low-risk savings instruments are often recommended for a well-rounded retirement portfolio. Their yields are usually more steady than stellar, and they may offer some tax advantages.
ANNUITIES
An annuity (1) can be a great way to augment your income during retirement. You pay an insurance company a set amount, and they send you regular payments for life, guaranteed. There are many different types to choose from, such as variable annuities offering tax advantages, retirement income, and the possibility for growth when the market rises.
WHOLE LIFE INSURANCE
Surprised? You may think of life insurance only in terms of guaranteed death benefits. But there is lots of life in life insurance, too. A whole life policy (2) provides guaranteed cash value growth — earnings you can use to supplement your retirement income.
YOUR UNIQUE INCOME PICTURE
Income from any one of these sources alone will not be enough to sustain your retirement lifestyle. To bring your retirement numbers into focus, fill out an income gap worksheet. You’ll see whether all your sources of income, guaranteed and non-guaranteed alike, will potentially support the retirement lifestyle you want. Then, you can work with a financial advisor to close any income gaps. There is no one right retirement plan. However, a plan that includes one or more sources of guaranteed income is a sound approach. That’s not all: Research shows that retirees who have guaranteed income tend to be more confident in retirement than those who don’t — and they are likely to retain a high level of contentment throughout retirement.(3) They say money can’t buy happiness. But guaranteed income in retirement can help, and its many benefits extend well beyond finances to increase your emotional and financial confidence now and later in life.
Brought to you by The Guardian Network © 2017. The Guardian Life Insurance Company of America®, New York, NY
2018-58304 Exp. 03/2020
SOURCES: https://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html
http://money.cnn.com/2016/01/20/retirement/retirement-guaranteed-income-annuities/index.html
https://www.nationwide.com/annuity-investments.jsp
https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/articles/2016-08-31/why-ira-cds-can-be-useful-for-a-part-of-your-portfolio
[1] Annuity guarantees are backed exclusively by the strength and claims-paying ability of the issuing insurance company.
[2] While the primary purpose of life insurance is death benefit protection, it is important to understand the advantages that cash value accumulation can provide to clients, including supplemental income during retirement.
[3] Is Guaranteed Income for Life the Right Option for You? Money, Sept 28, 2017.