Back-of-the-envelope retirement planning
And with most annuities, there’s no money left for a legacy after you and your beneficiary die; with systematic withdrawals, you can leave a legacy with any money left in your accounts when you die. Note that GLWB annuities are the exception to the above statements about annuities, and they offer the ability to tap into your savings and the potential to leave a legacy with any money left over after you die. But there’s a tradeoff, since GLWB annuities have lower payout rates than fixed or variable annuities, and they incur fees for the insurance guarantees. 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. I often recommend that you split your retirement savings between annuities and systematic withdrawals, so that you diversify your retirement income and realize the advantages of each method.
Read the rest here: Retirement income scorecard: Immediate annuities
How Long Will Your Retirement Savings Last?
For example, if youre 60 and have $1 million saved, it shows you can generate $62,305 a year in retirement income starting League City Reverse Mortgage in 2018. (Note: That example was based on July 19 data.) Its almost impossible even for people who have studied finance to be told at age 55 to take their assets and project them out to age 65 and calculate what annuity prices are going to be at that time, says Jack VanDerhei, research director at the Employee Benefit Research Institute , a nonprofit in Washington. For the vast majority of defined-contribution plan participants, I think this is going to simplify it to the point that they can understand what theyre facing in terms of a shortfall, VanDerhei says. If this actually gets used the way it is intended to, I think its going to be a huge help. BlackRocks index and accompanying tool assume a constant inflation rate of 2.5%. Thats because its tough to find annuities linked to the consumer-price index, and doing so could increase the cost to the point that people think they dont have enough money to retire, says Chip Castille, head of the firms U.S.
Read the rest here: How Long Will Your Retirement Savings Last?
And your income will depend on a number of economic factors, such as interest rates, dividend payout rates and annuity purchase rates in effect at the time you retire. How to avoid going broke in retirement To help you answer the vital question above, here’s the next installment for 2013 of my retirement paycheck scorecard series. It shows you the amount of retirement income that can be generated from $100,000 in retirement savings as of the beginning of July for each of the three RIGs I summarized in my recent post, ” 3 ways to turn your IRA and 401(k) into a lifetime retirement paycheck .” You may want to review that post for background and to familiarize yourself with the advantages and disadvantages of each method. Retirement income generator #1: Interest and dividends only One way to generate retirement income is to invest in a mutual fund that pays a regular dividend and then use just the interest and dividend payments to cover your living expenses. Because you aren’t dipping into your principal, there’s a very good chance you won’t outlive your money. This method also offers the maximum flexibility and access to your retirement savings.
Read the rest here: Retirement income scorecard: Interest and dividends
Retirement income scorecard: Interest and dividends
Before that he was president of The Boeing Aerospace Company, a division which did all of Boeings space work and most of the military products. He now helps people with retirement planning personally and with articles and programs on Aanalyze Now , a site often referenced by The Wall Street Journal and many financial publications. He has three degrees from MIT, has been on advisory committees to the U.S. Congress, Departments of Interior, Commerce, Energy, and Defense, an economic advisor to the Washington State governor, a member of Washington’s Economic Development Council and a member of several university boards. /conga/retirementors/bios/hebeler_henry.html 238932 View all The RetireMentors is powered by When I went to work for Boeing as an engineer, my first supervisor was Max Braun, a very bright guy who employed a number of very simple checks to see if my own detailed extensive calculations were in the right ballpark. Some of these checks were the analytical methods used to design the first 707.
Read the rest here: Back-of-the-envelope retirement planning