As people live longer, the fear of running out of outliving your retirement savings is becoming far more pressing for many people facing retirement. Fortunately, there are options available to you that will help you sustain yourself throughout your retirement.
Guaranteed lifetime income, It’s something that is often overlooked during the retirement planning stage and something that could prove instrumental in helping you sustain yourself through a longer than expected lifespan after retirement. These are a few options available to you to help you generate a sustainable income for the rest of your life.
Social Security Income
For people retiring soon, Social Security remains a viable option. You’ve paid into the system your entire career. Upon retirement, it will return the favor by offering you a guaranteed monthly income for the remainder of your life. The income it provides varies according to what you’ve paid into the system over the years. While it won’t replace your current income, it will provide consistent income throughout your retirement.
You can maximize your Social Security income by delaying your start date for receiving these benefits. While you may be able to begin claiming your Social Security benefits at the age of 62, your benefits are reduced as much as 30 percent when you begin receiving them at the earliest possible date. Waiting until the age of 67 ensures you don’t feel the sting of claiming them early. However, if you wait until the age of 70, your benefits increase by eight percent. More importantly, your cost of living adjustments (COLAs) will be based on the larger benefit.
Invest in Real Estate
While the guarantee for real estate isn’t as rock solid as it is with Social Security, if you make the right types of real estate investments, and manage them properly, you can generate some income for as long as you hold the properties. Real estate has fallen out of favor since the crash of 2007-2008 but it remains a viable source of retirement income for many people.
Especially among those who invest in multi-family dwellings like apartments and who invest in commercial properties in prime locations, like shopping centers, office complexes, etc. The key is to buy in areas poised for growth, in high demand, and not in states of decline.
If, at any point, you become concerned about the growth possibilities of an area, you can sell the property and invest elsewhere or cash out altogether in favor of another type of guaranteed income for life. One we’ll discuss next.
Annuities
This topic covers a lot of financial ground, ground that is often overlooked during the retirement planning process, Which is unfortunate because it has so much to offer in the way of lifetime income.
Before we dive into the benefits of annuities, it’s important to discuss the prime consideration. Annuities are not easily liquid assets. You invest the money and you can “cash out.” But, doing so comes at a steep price.
In most cases, you’re allowed to take out five to six percent of the guaranteed value of your annuity each year but taking out more may place the guarantee in jeopardy, which is something you don’t want to do.
Which is why you absolutely must read the small print – to avoid harsh penalties that can negate your guaranteed income or compromise it substantially? One way to avoid this is by having a sufficient investment outside of your annuities that allows you more liquidity for emergencies or unique circumstances that may leave you needing additional cash during one year of your retirement.
What’s so great about annuities?
Aside from provisions that guarantee cash for life at a very small price to you, there are some annuities that allow you to designate a beneficiary for whom the guaranteed income will continue even after your death. This is ideal in the case of spouses. Some will only allow you to designate a spouse as your beneficiary; however, some allow greater flexibility.
The bottom line is that annuities allow you to generate a sufficient amount of income, based on your investment, for the remainder of your life, no matter how long your life may be. Something many other types of investment do not provider for.
Still concerned over your retirement? Join one of our free educational workshops to learn more about your options for generating income and retiring comfortably.
Licensed Insurance Professional. Provides general information about insurance and retirement-related products and services. These products and services may not be specific to a particular state. Information provided on this website, in seminars or through printed or other published materials are not intended as specific legal, accounting or investment advice to an individual’s particular situation. By providing your information to us, you agree that we may contact you regarding the potential sale of annuity and/or insurance products. Information provided by Licensed Insurance Professional does not necessarily represent that of the individual professionals presenting this information. All the information presented is believed to be accurate and is secured from reliable resources, however, no guarantee is made to the completeness or accuracy of the information presented. Any opinions expressed are those of the author and the material presented is for educational and informational purposes only and is not intended as legal, investment or tax-related advice.
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