Once your client has saved up a significant retirement nest egg, what’s next? Determining how to spend down retirement savings — without running out of money too early — is essential, but also challenging.
The following tips can help producers guide their clients through the retirement budgeting process, ensuring they maintain a comfortable lifestyle for as long as possible:
Set aside money for emergencies. Unexpected things — car accidents, medical emergencies, etc. — can happen at any moment. It’s important to set aside some funds to help cover emergency costs that could pop up. It’s typically best to keep these funds in cash, so investments don’t have to be sold at a loss.
However, to help boost returns, the money can also be stored in a retirement plan stable value fund or a fixed annuity, as long as there are no penalties on withdrawals.
Postpone Social Security. Delaying Social Security payments for a few years can help retirees boost their monthly payments once they do start collecting. If they have the means, clients should set aside about five years’ worth of cash to pay for living expenses until they’re ready to claim their benefits.
Get rid of debt. Retirement success hinges on the ability to live on a steady stream of monthly income.
Fewer payments — on cars, homes and credit cards — mean that monthly income allotment can be stretched further or even reduced.
Don’t outlive funds. This is the most important and crucial tip of all. The truth is that many Americans haven’t saved as much as they should have for retirement. The Center for Retirement Research at Boston College estimates that roughly half of the country’s households will not have enough retirement savings to maintain their lifestyle once they stop working.
An annuity, and the steady stream of income it can provide, might be able to help a client who is facing a shortfall. An indexed annuity, in particular, could provide that income as well as offer the potential for future gains, via interest crediting linked to the performance of an underlying index.
1Imeriti can provide producers with additional tips and information on drawing down retirement savings and the benefits of annuities. Contact us at 800.921.3100 or [email protected].
1Annuities are designed to meet long-term needs for retirement income. They provide guarantees of principal and credited interest, subject to surrender charges, and a death benefit for beneficiaries.
Guarantees are backed by the financial strength and claims paying ability of the issuing company.
Imeriti Financial Network