How Long Will Your Retirement Savings Last?
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. Please note that the incomes shown above are pre-tax amounts. Federal and state income taxes will have a significant effect on your after-tax income and should be taken into account. The income taxes you pay will vary depending on whether your annuity was purchased with pre-tax investments in traditional IRA or 401(k) accounts, or with after-tax investments. Because only you know which method or combination of methods might work best for you, you should take the time to learn as much as you can about the various methods of generating a retirement paycheck.
Read the rest here: Retirement income scorecard: Immediate annuities
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. and Canada defined-contribution group. Plus, retirees who receive Social Security retirement benefits already get a cost-of-living adjustment linked to inflation, VanDerhei says. Theres still a missing link, he says, and youll have to figure it out for yourself: the amount of income youll need each year in retirement.
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Forget Yield — Dividend Growth Is The Metric That Matters For Retirement Income
[Disclosures: Sizemore Capital is long O.] I chose Realty Income for a very specific set of reasons. First, in 2003, its dividend yieldat 3.5%was close enough to the 10-year Treasury yield to make these two viable competitors for the would-be income investors portfolio. Secondly, as a low-risk, triple-net retail REIT, Realty Income is a prime example of a stock that has come to be viewed as a bond substitute by income investors. So, how did Realty Income stack up? The math here is a little more detailed, but Ill do my best to keep it simple. A million-dollar portfolio invested in Realty Income at the beginning of 2003 would have bought you 29,516 shares paying $1.17 per share in annualized dividends. That works out to $34,534 in income in the first yearor about $5,500 less than the 10-year Treasury. But this is where it gets fun. Unlike the bond, Realty Income actually raised its payout every year. By 2013, those 29,516 shares were paying out $2.18 per share in annual dividends. That works out to $64,345 in annual incomeor $24,345 more than the interest from the bond.
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ING U.S. Research Highlights Importance of Securing Reliable Income in Retirement
Meanwhile, less than one-in-ten (8%) of pre-retirees expected to have a lower standard of living when they stop working and enter retirement. Separately, an overwhelming majority (80%) said they would be willing to make a financial trade-off and give up some spending money today in order to secure a Reverse Mortgage Cypress level of guaranteed retirement income in the future. However, nearly four-in-ten (37%) expected to run out of money needed to support their desired lifestyle in retirement. Finally, more than one-third (34%) believed that $500,000 or less in retirement savings would be enough to provide a comfortable income in retirement or had no idea how much would be needed. To put these findings into broader context, ING U.S. recently hosted a web-based presentation, which it has also made available on its public website. The presentation features perspectives, trends and forecasts from three ING U.S.
Read the rest here: ING U.S. Research Highlights Importance of Securing Reliable Income in Retirement