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Imagining your retirement years and how you want to spend them can be exciting - and planning ahead can help make that vision possible. To help turn that vision into reality, it’s a good idea to have a solid retirement plan. By preparing for both expected and unexpected costs — and making sure your fixed retirement income plan can cover them — you can be better positioned to make your savings last and enjoy the next chapter with greater confidence.
Having realistic expectations about retirement costs, spending habits, and sources of income is a key part of effective planning for retirement. This helps build a strategy that can support long-term goals and promote greater financial stability. To better understand income needs in retirement, consider the following:
Also consider possible unexpected expenses like a health emergency or the need for long-term care.
Review your savings portfolio and retirement accounts.
In retirement, the focus typically shifts from growth to conservation and from saving to spending. It’s important to consider whether assets have the potential to keep up with inflation. At the same time, managing risks often becomes essential to help the overall portfolio.
Make fixed retirement income planning a priority.
When transitioning from work to retirement, many people rely on their personal savings, retirement accounts, investments, Social Security, and any pensions they might have. Rising inflation, longer lifespans, increased medical costs, and market volatility can all affect a person’s nest egg and the length of time those savings will last.
Creating a fixed retirement income plan as part of comprehensive planning for retirement can improve retirement readiness and may help savings last. One option to consider is annuities, which can offer a reliable, lifetime income. By providing a stream of payments that can support retirement, annuities help reduce the risk of outliving savings and add a layer of financial stability for the future.
One type of annuity that can help secure retirement income and lessen the effect of market downturns is a fixed index annuity (FIA). A fixed indexed annuity can be a good option for those seeking guaranteed income options and index-linked growth potential. They can provide steady, predictable lifetime income, which can help cover essential expenses in retirement. FIAs credit interest based on a fixed rate or the performance of an index, subject to caps, participation rates, or spreads, and typically offer more conservative growth potential than variable annuities, so they may be useful as part of a diversified retirement income strategy.
Understanding the features of FIAs can help determine if they’re the right fit for a retirement income plan.
Benefits of FIAs
Along with providing income payments in retirement, adding an FIA to a retirement income plan can help grow savings while protecting those assets from a degree of market volatility. Index credits are based partly on index performance without directly investing in the market. This means money has some protection from losses when the market goes down, and earnings can never be less than zero. This combination of upside potential and downside protection can help a person grow their assets for retirement while offering some protection for their hard-earned savings from changing market conditions.
FIAs may also provide a “retirement paycheck” that offers a guaranteed income stream for the rest of your life. This steady source of income can help cover essential expenses and support a consistent standard of living throughout retirement.
Considerations of FIAs
While FIAs offer valuable benefits, there are some considerations to keep in mind. Growth is typically limited by caps or participation rates, which may limit potential gains compared to other types of annuities or investments.
Like most long-term financial products, FIAs may include features such as surrender periods or charges for optional benefits. A financial professional can help you understand these details and decide what’s right for your situation.
The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.
38471R-31 | PRT 07-26
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