Will I run out of money? How long will my money last?
Knowing how long your money will last in retirement is an important question and the driving force behind retirement income planning. There are many factors that come into play- here are some of them:
- Spending habits- it is very difficult to reduce your lifestyle in retirement- in fact it is almost painful if you are forced to do it. Analyze what you spend and see if your income will support your spending.
- Debt- it should be a priority to be debt free going into retirement, but it is not always possible. How can you manage your debt within your budget?
- Guaranteed income- do you have a pension that provides income? What happens if you die- does it continue, reduce or end? Social Security falls into this category- when you start taking benefits is a key part of planning.
- Health insurance- you need to budget for health insurance and Medicare supplements.
- Your investments- are they taxable when received? Already taxed?
Once you know your parameters, you need to look what expenditures can be supported from your income sources. Different investments will provide different benefits. Consider these:
- You can live off dividends or interest from your investments. They can provide nice income when rates are high, but can be unreliable during market change
- Annuities can provide a lifetime income but usually have higher fees that can limit the total amount received
- Bank CD’s are guaranteed, but now pay low interest, which limits your income
- Systematic withdrawals from your investment account are common, but you need to make sure you are not selling stocks during a major downturn
Your NorthStar Financial Partners advisor can give you a retirement income projection, showing the result of a certain level of income versus spending, under different circumstances. By varying the amounts and assumptions, we can give you a good idea of where what income will be supported by your portfolio to make good decisions about retirement. Please contact us if you are interested—we are glad to help!
Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Guarantees are based on the claims-paying ability of the issuer. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.