We’ve never met anyone who has said, “Hey, I've got too much income!”
Given the inherent complexity and unpredictable nature of retirement income planning, it's important that sustainable income is included in your plan via a fixed guaranteed income annuity. Merriam-Webster's simple definition of sustainable is "able to last or continue for a long time." Examples of sustainable income include Social Security, defined-benefit pension plans and targeted income annuities.
Figure out how much income you’ll need every month. We call this your “burn rate.” It seems elementary, but you’ll be surprised at the number of people we sit with who don’t know that number. Your burn rate is not what you’ll need to get by, rather what you want so you can enjoy your retirement. It should include your essential expenses and your lifestyle expenses. After all, you’ve worked hard to earn it!
Living Longer. This is the number one reason for including sustainable, predictable income in your retirement plan; we will probably live longer than we think. Life expectancy for men and women who reach age 65 have increased steadily from 13 and 15 years, respectively, in 1950 to 18 and 20 years in 2010 per the National Center for Health Statistics 2011 report. There's a 20% chance that a healthy 65-year-old American male will live to 95, with the percentage increasing to 29% for a female per the Society of Actuaries 2012 Annuity Mortality Table. Furthermore, wealthier people tend to live longer.
During the distribution phase of your retirement assets, it is imperative that a portion of these assets provide a lifetime income stream to hedge against
outliving your assets. This is the foundation and bedrock of a good retirement income plan. Remember, a retirement income plan is a lot different than simply a bunch of retirement accounts.
Simplify Your Planning
Simplification of your financial life becomes increasingly important as you age and deal with any cognitive decline. It's a known fact that having a specified portion of your retirement income, guaranteed to last your lifetime, allows you to sleep better at night.
Sequence of Negative Market Years
This is the risk of receiving low or negative returns in the early years of taking withdrawals from investments. Sustainable Guaranteed Income wards off the risk of running out of money.