Don't overestimate your retirement income

​Bob Lindquist, the founder of Safe Retirement Strategies, says there is a “massive gap” between the income people expect to have during retirement and what they will actually have and be able to spend.

Rising health care costs and longer life spans eat up more annual retirement income than is expected by most Americans causing significant financial and emotional stress. The rule of thumb is to put yourself in a position to replace 70% to 90% of your annual pre-retirement income.  

The possibility of outliving hard-earned savings is a real threat to Americans currently in or approaching retirement. Most of us are focused on building investment portfolios and accumulating savings that we intend to “spend down” when we retire.

But there is a fundamental flaw in that strategy. Even people who spend their whole lives growing their savings worry they will be unable to maintain their desired lifestyle in retirement due to market losses or unexpected expenses.

To ensure a secure retirement, people need a plan not only to build a large nest egg but to protect their savings and replace the income they had when they were working. The younger they start retirement income planning the better prepared they will be to fill the gap.

“We’ve worked for 30 or 40 years and our retirement may last longer than that. We’re living so much longer. Prices keep going up. Just saving money isn’t enough. We need to generate income,” said Lindquist.  

The reality is, there are only 3 sources of guaranteed income: social security, pension plans and fixed index annuities. The latter gets a bad rap because of widely held misconceptions that annuities are just insurance and not a real investment vehicle.

Sure we want our money to grow. And these are professionally managed investments by some of the biggest names on Wall Street. But unlike mutual funds and exchange traded funds, “every year that our money grows the gains are locked in and never exposed to market risk again.”

It never ceases to amaze Lindquist how many people are reluctant to tap into a vehicle that generates income they can never outlive just because it’s being offered by insurance companies. “You’ve worked a lifetime saving money. You deserve peace of mind.”

With fixed index annuities, after years of saving you are free to enjoy the benefits without worrying about running out of money. Your retirement satisfaction depends on having the money you need to spend on leisure activities like travel, entertainment, dining out and hobbies. Lindquist believes such spending tends to boost happiness because it keeps us more active and socially engaged.     

For your introductory guide to fixed index annuities call 913-814-9600.