Balancing Growth and Income in Retirement

If you are nearing retirement or are already there, one of your most important tasks will be balancing your investment choices between income production and growth potential to stay ahead of inflation. 

Today's retirees are facing higher costs for fuel and food, an increasing share of growing medical costs, and lower housing values. How will they manage their retirement income given these pressures? What options are available to them to help them adjust to these changes?

For many Americans, retirement, once viewed as a time of relaxation, travel and enjoying life with family and friends, has evolved into a time of financial uncertainty and fear. In a poll of over 3,000 people ages 44 to 75, more than three in five (61 percent) said they feared depleting their retirement assets more than they feared death.

Need For Informed, Integrated Decision Making

Over the past twenty years, the continuing shift toward personal responsibility has placed increased pressure on individuals. Given the continued importance of individual responsibility in accumulating and managing retirement assets, there is a greater need than ever before for education and guidance. Individuals who do not fully understand their situation can be unduly influenced by emotions. Research indicates that retirement decisions are often influenced by behavioral factors - such as fear of the unknown, lack of trust, and desire for control.

According to the most recent data from the Federal Reserve, more people turn to friends, family members, or associates for financial information than to any other source of information on borrowing or investing.

Research shows that some people fail to plan and others plan for too short a time.

Hueler Companies: "The Retirement Income Challenge: Making Savings Last a Lifetime."

Hueler Companies, an independent consulting firm known for independent research, analytical reporting, suggests that if retirement plans offer access to low cost, transparent annuitization and lifetime income options through an institutional framework, lifetime income payments from these converted retirement savings can provide a reliable level of financial security while reducing risk and enhancing quality of life. Lifetime income options can create significant financial benefits for participants who use a portion of their retirement savings to create a supplemental "paycheck for life" and can help avoid the three primary financial risks in retirement: 1) longevity risk, or outliving one's retirement savings; 2) investment risk, based on market performance; and 3) inflation risk, or the erosion of buying power over time. Plan sponsors are often wary of offering access to lifetime income or annuity products because they fear that this increases their liability or creates the perception that they endorse a particular approach.

Bottom Line: Ensuring Income Throughout Retirement Requires Difficult Choices

As life expectancy increases, the risks that retirees will outlive their assets is a growing challenge. There is increased responsibility for workers and retirees to make difficult decisions and to manage their retirement assets so that they have enough income throughout retirement. If you feel that you are not getting the absolute best advice for your particular situation, use the contact us button at our website.$

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