Retirement is meant to be a relaxing, enjoyable season of life in which you can kick your feet up and enjoy the fruits of your labor. However, many retirees have accumulated plenty of savings but are so afraid of outliving them that they overcorrect into frugality. In fact, a study by the Investments and Wealth Institute found that most Americans with $2 million or more in assets live well below their means in retirement, and another found that 30% of retirees don’t withdraw from their portfolios at all. After years of disciplined saving and carefully calculating retirement income, it’s quite a letdown to forego the lifestyle you were anticipating. What if there’s a better way?
Alternative retirement plans may seem unfamiliar, unconventional, and, well, uncomfortable. After all, most of us have spent a lifetime saving through 401(k)s and IRAs. However, the system is clearly broken. Let’s look at a better way to UnStress Your Retirement® and plan for greater satisfaction.
The Issue With Monthly Retirement Income
There’s often a disconnect when we get to retirement. When saving for post-working years, financially savvy people rely on budgets to tell their money where to go: money in, money out, divvied up into monthly expenses, long- and short-term savings goals like vacations or retirement, and personal allowances. Most of us are good at saving for retirement, but not many of us are good at spending that money once we get there. Simply put, it’s difficult to shift from saving to withdrawing, treating your retirement accounts like monthly income. The years-long habit of setting money aside for future needs is hard to break out of, which is why many retirees struggle to spend without guilt in retirement, even when spending on necessities.
Switching your mindset is even harder when you consider factors like inflation, the potential for hefty medical expenses, and the risk of outliving your retirement savings. It’s not that Americans don’t have enough for retirement; it’s that they’re afraid to use their retirement savings because of all of the what-ifs. The result is worrying your way through retirement instead of enjoying it. This is why we often see greater satisfaction in those who have monthly retirement income; they don’t have to “think” about withdrawing, their stress levels are lower, and they can fully enjoy their golden years.
DeStress Your Retirement® With Annuities
There’s a reason why we say people with Modern Annuities® are some of the happiest people we know. Having a steady, monthly paycheck in retirement eliminates the need to switch from a saving to a spending mentality, preserves your assets, and allows you to enjoy your retirement without the worry of outliving your income. So how exactly does an annuity work once you’re retired?
An annuity is essentially a contract between you and an insurance company. You “loan” money to the company, either by purchasing or investing in the annuity, and the insurance company pays you guaranteed income in the form of interest, either for a set duration of time or for the rest of your life. With traditional annuities, investors have three options: fixed, indexed, and variable. With variable annuities, the income stream is tied to the performance of the investments held within the annuity, which, as you can imagine, fluctuates. Fixed and indexed annuities hold the least risk, which is exactly what you want when looking for retirement income. We recommend either of these options to clients, depending on their needs. Indexed annuities can be especially valuable to retirees, as they may allow you to accrue compounding, tax-deferred earnings with higher interest rates than other, similarly low-risk alternative retirement plans.
When compared to 401(k)s and IRAs, indexed annuities can offer retirees more insulation against market fluctuations, increased flexibility when accessing funds, and can be structured to include monthly payments. And, thanks to new, highly customizable options, which we like to refer to as Modern Annuities®, you can:
- Realize strong returns even if the S&P 500 has a bad year, since your index rebalances weekly from stocks, bonds, or gold.
- Experience uncapped indexes, which offer protection for down years without a cap on high-performing years.
- Add a liquidity rider, allowing you to access more than 10% annually. This can be structured cumulatively, allowing for increased flexibility when accessing funds.
Altogether, this makes it easier to budget and predict your income, culminating in a stress-free, enjoyable retirement.
Crafting a Guilt-Free Retirement Plan
Most traditional retirement strategies hinge on asset accumulation, specifically through traditional retirement-saving vehicles. The problem is that when you get to retirement, you don’t need assets; you need income. And, while you can sell those assets, navigating taxes and capital gains while reducing your nest egg’s ability to continue growing can cause significant stress. On top of that, overcoming the psychological guilt associated with depleting what you worked so hard to accumulate can be a barrier to retirement satisfaction.
At Parady Financial Group, when we talk about Your Life, Your Way℠, we mean it. Your money should work for you, and accessing it during retirement shouldn’t send you into a tailspin of anxiety. It’s our mission to help you create a strategy that alleviates stress while empowering you to enjoy retirement to the fullest and beyond. If you’re ready to move past the status quo and create steady, low-risk revenue streams for your retirement, we’d love to help. Call us at 352-750-4029, or learn more by joining one of our events through the Parady Learning Lounge®.
