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Are
you between the ages of 55 and 64? If
so, you belong to a group that is
apparently quite concerned about saving
for retirement but not at all sure how
to convert those savings into a steady
income stream. If this describes your
situation, you will need to take action
to ensure that you have the financial
resources available to enjoy the
retirement lifestyle you've envisioned.
But before we look at how
you can help take control of your
retirement income scenario, let's look
at some interesting statistics. A
Prudential Financial study of
near-retirees – those between 55 and 64
- found the following:
-- Eighty-three percent of
those surveyed think it is very
important to generate an income that can
provide a comfortable retirement
lifestyle but only 20 percent say they
are well-informed on how to do so.
-- Ninety percent of
near-retirees are either guessing how
much income they will have in retirement
or have no idea of how much income they
will be able to generate during their
retirement years.
-- Only 15 percent of survey
respondents are focused on generating
retirement income, while the remaining
85 percent are still concentrating on
building a retirement nest egg,
preserving their savings or working
toward better returns.
If the above statistics are indicative
of the national populace, it seems clear
that many near-retirees are going to
have to start taking action to meet
their retirement income needs. Here are
a few steps to consider:
-- Evaluate your available
financial resources. When you retire,
you will probably be able to draw income
from a variety of sources: Social
Security, your 401(k) or other
employer-sponsored plan, your Roth or
traditional IRA and your other savings
and investments. Well before you retire,
you will want to estimate how much money
you will likely have accumulated from
these resources.
-- Calculate a withdrawal
rate. Once you know about how much money
you will have available during your
retirement years, you need to determine
a suitable withdrawal rate, how much you
can reasonably afford to take out each
year. Of course, your age will help
determine your choices. You typically
must start taking distributions from
your 401(k) or other employer-sponsored
plan once you reach 70-1/2, and the size
of your Social Security checks will
depend on when you start taking them.
Yet you have a great deal of latitude in
deciding when, and how much, to withdraw
from your investment portfolio. By
working with a qualified financial
professional, you can determine a rate
of withdrawal based on your portfolio's
expected growth and your individual
needs.
-- Consider
income-generating strategies. If you are
within a few years of retirement, you
may want to consider shifting some, but
certainly not all, of your
growth-oriented investments into
income-producing ones. Consequently, you
might want to look at fixed-income
vehicles, such as bonds, or even an
immediate annuity, which can be
structured to pay you an income stream
you cannot outlive.
By following these
suggestions, and by constantly keeping
income in your thoughts as you create an
investment strategy for retirement, you
can help create the cash flow you need
to fully enjoy your golden years. |
