How clear is your crystal ball? Mine isn’t very reliable. And that’s too bad, because it would be so helpful if we could see into the future — especially when it comes to retirement planning.
One of the biggest priorities in retirement is figuring out how much money you’ll need to live the life you want. Planning is a necessity, of course, and there are effective strategies to accumulate money to use when living out your golden years.
But barring a major development in crystal ball technology, none of us really knows how long we will live. And that poses an interesting challenge: How to plan your retirement with the confidence that you won’t outlive your money.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
With October being National Retirement Security Month, it’s a good time for people to think about “longevity risk” and developing strategies to make their retirement funds last. After all, what good is a nest egg if it runs out before you do? Or, equally tragic, what good is your hard-earned savings if you underspend and under-live from fear of running out?
Better planning equals better outcomes
Over the past few decades, there has been a shift from pension plans to 401(k)s and other defined contribution retirement plans. That puts more responsibility than ever on the shoulders of individual investors and their financial advisers. When you factor in higher market volatility and bring into the picture the potential for market drops in early retirement years, you’ve just poured gasoline on the fire.
It’s no wonder so many people are worried about running out of money and not being able to live the life they want in retirement. They guess how long they’ll live and usually guess short. A strategy that incorporates a stream of protected lifetime income in your portfolio will guard against longevity risk and help take the guesswork out of the equation.
I encourage you not to “wing it” and instead build a retirement plan that you feel confident in and have the resiliency to follow. Every industry insider knows that better planning will drive better outcomes.
Planning idea No. 1: Lifestyle is important
Your plan should include flexibility to account for different and changing lifestyles — things like delayed retirements, part-time work and staying longer in lifelong homes. Defined contribution plans, interest-bearing personal savings products (like money market funds), investment vehicles and insurance-based protection strategies can all play key roles in generating sustainable lifetime income to meet desired outcomes.
Planning idea No. 2: Knowledge is power
It’s important to educate yourself about available products and solutions in the marketplace. Lack of preparedness and education can result in having to make spending cuts that could compromise your desired retirement lifestyle. Let’s make sure that’s not the case.
Annuities, for example, are vehicles that can help improve retirement security. But they’re not for every person or every situation. For many, though, protected accumulation strategies guard against downside risk, insulating assets from the effects of market volatility, while generating predictable income streams for fixed expenses, thus helping to protect the retirement outcomes of tomorrow.
Planning idea No. 3: You don’t have to go it alone
So, you’re open to some help but don’t know where to start? The good news is there are many tools and resources to help you plan your retirement, with a trusted financial adviser being at the top of the list. An adviser will likely start the conversation by asking about your desired outcomes. If you’re clear on the outcome, then it will be easier to make choices from a range of options and strategies.
If you’re not quite ready to speak face-to-face, there also are online tools that can help you get going. Web-based solutions like Prudential Stages for Retirement can help unlock your Retirement Confidence Score and see personalized projections of your retirement income and spending over time. Then, if you’re ready to kick things up a notch, you can connect more deeply with a financial adviser to help you define, refine and realize the retirement you envision.
Remember: There’s no time like the present
As we turn the page on another National Retirement Security Month and dive into the remaining weeks of the year, now is an ideal time to think about building an all-weather retirement plan so you’re confident in reaching your goals. If you don’t start today, you’ll just be a day later and a dollar shorter when you do. Good luck on your retirement planning journey, and remember, you’ve got this!
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. If you would like information about your particular investment needs, please contact a financial professional.
Annuities are issued by The Prudential Insurance Company of America, Newark, NJ, and its affiliates.
A variable annuity is suitable for long-term investing, particularly when saving for retirement; however, it is possible to lose money investing in securities.
Annuity contracts contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your licensed financial professional can provide you with complete details.
Prudential Stages is an umbrella marketing name for Pruco Securities LLC (sometimes referred to as “Pruco”) under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate agreement. Investment advisory products and services are made available through Pruco, a registered investment advisor. 1074700-00001-00
related content
- How Much Will You Pay Yourself in Retirement?
- Four Things Gen Xers Can Do Now to Reach Retirement Goals
- Four Tips to Help You Conquer the Retirement Mountain
- Glass-Half-Empty Retirement Outlook? Here’s Some Advice
- Nervous About Retirement? Ask Yourself These Five Questions
-
This 401(k) Withdrawal Snafu Could Knock Your Portfolio off CourseFew financial advisers have heard of this 401(k) withdrawal issue. Here's how to safeguard your portfolio.
-
A Financial Checklist for Your College-Bound KidsIs your child heading off to college this fall? If so, make sure they're prepared and protected in these four key areas.
-
Why Homeowners Should Beware of Tangled TitlesIf you're planning to pass down property to your heirs, a 'tangled title' can complicate things. The good news is it can be avoided. Here's how.
-
A Cautionary Tale: Why Older Adults Should Think Twice About Being LandlordsBecoming a landlord late in life can be a risky venture because of potential health issues, cognitive challenges and susceptibility to financial exploitation.
-
Home Equity Evolution: A Fresh Approach to Funding Life's Biggest NeedsHomeowners leverage their home equity through various strategies, such as HELOCs or reverse mortgages. A newer option: Shared equity models. How do those work, and what are the pros and cons?
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the FairwayThink of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty MovesIf you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
