I do not love annuities. I don’t even like them. I’ve never recommended them to clients, and I highly doubt that would ever change. It’s still not even going to change today. That said, there is one strategy where I think it makes sense for some people. Before we get into the strategy, let’s briefly discuss the two annuities I really don’t like, and then we’ll talk about the one I dislike the least. First is the Deferred Annuity. A…
Category: Retirement Income
The Most Important Thing To Determine Before You Retire
If you’ve been planning to retire in the next few years, odds are that you’ve spent a lot of time reviewing your investments, including the account balance, the specific investments you own, the asset allocation you have, and even reading about proper distribution strategies. While all of that is important, you’re actually missing the most important thing to know before you retire: Your Retirement Expenses! Simply put, nothing else matters until you figure out how much you want to…
What Risk and Volatility Mean For Your Retirement Income
As a financial planner for over 6 years, one of the things that really frustrates me is poor explanations, as well as implications, of certain financial terms. The confusion it stirs up causes well-meaning investors to make poor decisions that cost them in retirement, and in some cases, cause them to end their retirement and go back to work. One of the most dangerous misunderstandings is that risk is the same thing as volatility. As well as not fully understanding…
Is The 4% Rule Now The 3.3% Rule?
One of the most common retirement rules of thumb is the 4% rule, which helps guide you on how much you can take in retirement distributions without running out of money. It essentially suggests that if you have $1M in investments, you can safely withdraw $40K per year, adjusted for inflation. New research by Morningstar suggests that instead of using 4% as a guide, you should use 3.3% instead.
In this episode, I’ll go into why I don’t like using either percentage as a rule in your retirement and I’ll tell you what to do instead.
The biggest threat to your retirement that you don’t know about
There’s no feeling like when you are close to retirement and you know you have a really huge, juicy nest egg waiting for you. But what if I told you there was one tiny thing you may have never heard about that can ruin it? I don’t mean ruin a small part of your retirement plan, but all of it! Before you get too scared, hold on a minute… The flip side is that this tiny thing could make you…
Annuities 101 + Pros and Cons As An Income Stream
Before we get started, let me state that this post on annuities will be general in nature, and will not cover every single detail of them. They are simply too complex to cover everything in this post. Also: I am NOT recommending them. And you should absolutely work with an independent, objective financial professional (who won’t receive a commission from a sale) to discuss whether one of these products is right for you. With that out of the way, the…
3 Ways To Create A Retirement Paycheck
Using Dynamic Distributions For Your Retirement Income As we’ve been discussing in our series of retirement income, there are so many different ways that you can generate income in retirement. You have annuities, reverse mortgages, rental real estate and things like the 4% rule which govern how you can distribute money from your traditional stock/bond portfolio. Today, I want to cover additional strategies that will give you guidance on how much money you can take from your investment portfolio. Last…
Should You Use The 4% Rule To Create An Income In Retirement?
Most people have two major concerns about their retirement – whether they have saved enough and running out of funds. Planning ahead of time is essential when it comes to the amount of money you have in your retirement fund when the time comes. But, it’s equally important to plan your withdrawals ahead of time to make sure you’re not going through your funds too quickly. While figuring out how much to withdraw can seem overwhelming, tools like the 4%…
Pros and Cons of Rental Real Estate Income In Retirement
As you can imagine, it’s really impossible for me to give recommendations on what you specifically should do, especially when we get into the details of your retirement income. So what I’m going to do today is talk about something that I get asked about often, which is: Should we keep, or sell, our rental real estate in retirement? In today’s post, I’ll go through the pros and cons of having rental real estate as a way to generate income…
Should I Get a Reverse Mortgage In Retirement?
We are continuing our series on retirement income. One method that is often discussed, and draws really strong opinions, is getting a reverse mortgage. While reverse mortgages can be helpful, they can also be risky. Before you decide to get a reverse mortgage, it is important to understand exactly what you are getting into and how it can affect your financial future. What Is a Reverse Mortgage Reverse mortgages are essentially a type of cash-out refinancing, allowing you to turn…