With a great many investment portfolios down 15% or so, what can retirees do to make up for that lost source of income?
Now that COVID-19 has officially changed everything, let’s talk about how you can maintain as much of your retirement income as possible.
The combination of factors we have witnessed is almost overwhelming.
MoreAn impressive year in the stock market concluded the decade with a bang, which means it is a good time to ask yourself, “Are my retirement plans better off in 2020 than they were a year earlier?”
Along with a Dow Jones above 28,000, we have witnessed two other noteworthy events: Advisory firms are developing lower-cost strategies to help you spend that stock market windfall in retirement. And the government has made it easier for employees to turn their savings into pension-like lifetime income.
Once you’ve created an income plan for your retirement, don’t think you’re done when the numbers on paper meet your immediate expectations. A successful plan requires regular analysis and adjustments. Both might be required, either because your goals change or the world shifts.
That is the benefit of an income allocation plan over other types of planning.
When I wrote an article called Don’t Bet Your Retirement on Monte Carlo Models, I suggested reliance on safe sources of income, including annuity payments, and a modest outlook on the market to avoid huge ups and downs that you can’t control.
MoreMany clients and friends ask my guidance about Social Security – particularly the question of whether they should claim their benefits early or late. I have crunched the numbers. And I have not come up with a one-size-fits-all answer – because there isn’t one.
It turns out the best way for you to get the most from Social Security may not be the best way for your neighbor, colleague, friend or even your spouse. Add Social Security to the list of topics you discuss with family over the holidays. You will find more opinions about when to start taking benefits than you do about qualities of the best dessert.
If you do research on your own, you will quickly find articles that want to push you in one direction or the other. One will remind you that less than 5% of retirees wait until the maximum age of 70 to collect their benefits. Those who take their benefits at or before their “full” retirement age leave trillions of dollars on the table. The authors of those articles make you feel stupid if you claim “early.”
MoreWhen dealing with percentages, an offer that sounds good at first may turn out to not be so great, depending on where you are in your retirement planning.
As you accumulate savings, for instance, you’re looking to generate growth in your account and so you may hire an investment advisor to help you make the best choices.
Their fees are typically around 1%.
That number seemed low to my trainer, for example: “Only 1% a year,” as he said.
(Of course, on $1 million of savings, you would pay $10,000 – and more – each year.)
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