REWahoo
Give me a museum and I'll fill it. (Picasso) Give
From the folks at Northwestern Mutual Insurance, here's one more approach to making sure you outlive your retirement savings: Dividing up retirement may make income last
"With life expectancies climbing, so are fears about outliving savings. And as traditional defined-benefit pension plans wane, insurers are rushing new longevity-based products to the market.
… workers need to assess their income needs in retirement, match that to guaranteed forms of income such as Social Security and pension payments, and then consider guaranteed products such as annuities to make up for the difference. Any remaining funds can be invested to pay for extras beyond those basic needs.
…One such program is the 10-step lifestyle income approach, a strategy from insurer Northwestern Mutual.
The plan involves taking care of the final phase of retirement--old age--first, then investing 60 percent of the remaining assets for the beginning phase and the remaining 40 percent for the middle phase.
…between ages 45 and 65.…determine a portion of the nest egg that will go toward paying living expenses in old age, say, after age 85. That figure…is "carved out" of any 401(k) rollover at retirement and invested, with a 20-year time horizon for growth.
Between 65 and 75, younger retirees have the option to make midcourse corrections. If the stock market takes a brutal turn, for example, they can cut spending to make sure they don't overspend their income bridge for this time period.
From 75 to 85, the money not used for the first income bridge and for the old-age annuity can be used to fund living expenses…
Finally, at roughly 85, retirees can evaluate what's left. If their initial money carved out for this time period has performed well, chances are the person won't need an annuity.
If the person is healthy, but the set-aside money hasn't performed well, it will at least fund an immediate annuity that will offer a guaranteed monthly benefit for whatever lifetime the person has left."
"With life expectancies climbing, so are fears about outliving savings. And as traditional defined-benefit pension plans wane, insurers are rushing new longevity-based products to the market.
… workers need to assess their income needs in retirement, match that to guaranteed forms of income such as Social Security and pension payments, and then consider guaranteed products such as annuities to make up for the difference. Any remaining funds can be invested to pay for extras beyond those basic needs.
…One such program is the 10-step lifestyle income approach, a strategy from insurer Northwestern Mutual.
The plan involves taking care of the final phase of retirement--old age--first, then investing 60 percent of the remaining assets for the beginning phase and the remaining 40 percent for the middle phase.
…between ages 45 and 65.…determine a portion of the nest egg that will go toward paying living expenses in old age, say, after age 85. That figure…is "carved out" of any 401(k) rollover at retirement and invested, with a 20-year time horizon for growth.
Between 65 and 75, younger retirees have the option to make midcourse corrections. If the stock market takes a brutal turn, for example, they can cut spending to make sure they don't overspend their income bridge for this time period.
From 75 to 85, the money not used for the first income bridge and for the old-age annuity can be used to fund living expenses…
Finally, at roughly 85, retirees can evaluate what's left. If their initial money carved out for this time period has performed well, chances are the person won't need an annuity.
If the person is healthy, but the set-aside money hasn't performed well, it will at least fund an immediate annuity that will offer a guaranteed monthly benefit for whatever lifetime the person has left."
