Your Retirement Paycheck


Your Retirement Paycheck

Posted by Dubots Capital Management
4 years ago | July 27, 2017

Today I’d like to discuss one way to generate a paycheck from your retirement savings.

Immediate Annuities

With an immediate annuity, a portion or potentially all of your retirement savings is given over to an insurance company in exchange for monthly income guaranteed to last the rest of your life (no matter how long you live). You can also protect the income flow for your spouse or partner after you die by using a joint and survivor annuity.

The amount of your monthly income will depend on the type of annuity you purchase as well as your age, sex, and marital status.
People routinely inquire about annuity rates and fluctuations. Compared to rates offered at the beginning of October, fixed annuity rates have improved slightly while variable annuity rates have remained relatively unchanged.

Once again, the biggest and most advantageous benefit of an immediate annuity is you are guaranteed that your income lasts for the rest of your life, no matter how long you live and no matter what happens in the stock and bond markets. It can even be adjusted for inflation. Often people will assume that if they take systematic withdrawals from a portfolio backed primarily by stocks and/or bonds, they can achieve the same outcome (income for the rest of their life). But the risk is that the financial markets offer no guarantee, especially if you suffer poor investment returns. Since your ability to earn income is typically less as you get older, that guaranteed income stream allows you to sleep better at night!

When it comes to generating a retirement paycheck that will last the rest of your life, there’s no single answer that is appropriate for everybody. Your answer depends on your goals and circumstances. This is why it becomes critically important for you to understand the specific investment and savings rules, as well as tax and inheritance implications of each.

You’ll hear some advisers preach “diversity” and you are likely to receive the opinions of many friends and relatives. The bottom line, however, is different for every individual and couple and every portfolio deserves individual attention.

I encourage you to reach out to an experienced financial professional, seek answers to your questions, and increase your knowledge base so that you can make the right decision for your situation. Contact our office if you have any questions.

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