Proactively determining a strategic approach to turning your hard-earned savings into a regular income stream involves strategies that range from simplistic to very complex, with a variety of investment vehicles.
Systematic Withdrawal Plan Investors identify an amount to withdraw from the portfolio in the first year of retirement, then have the option to adjust that amount each year based on inflation or other factors.
Required Minimum Distribution More structured than the Systematic Withdrawal Plan, this plan follows the required minimum distribution calculated by the IRS.
Bond Ladder A bond ladder approach involves investing assets in a series of bonds that are scheduled to mature at different times, then reinvested in new bonds, on a rolling basis.
The Bucket Approach This method involves dividing retirement into several distinct time periods, or buckets, and implementing different investment strategies for each period.
Annuitization Annuitization strategies set aside money up front in exchange for a consistent, guaranteed income steam for life or a specified period. Guarantees are backed by the claims-paying ability of the issuer.
Guaranteed Lifetime Withdrawal Benefit Products Tax-deferred variable annuities offering Guaranteed Lifetime Withdrawal Benefits combine the guaranteed income of the annuitization strategy with the ability to manage assets for long-term growth. Advantages include a guarantee of minimum payments with the possibility of increasing payments. Keep in mind all investments carry some level of risk.
The Balanced Approach A combination of different strategies may be most appropriate. Matching different strategies with different retirement goals allows a retiree to find the right combination of control, flexibility, and guarantee for their situation.
Once retirement begins, accumulating additional retirement assets becomes difficult. Therefore, it is crucial to set and manage a plan that utilizes existing assets--through management of investments and careful budgeting--to help provide all retirees an enjoyable, successful, and fulfilling retirement.
