Sam Davis, a Senior Financial Advisor at Active Wealth Management and co-host of the Retirement Results radio & TV show, sheds light on retirement planning in the face of economic uncertainty and inflation. Many people find themselves anxious about their retirement savings and the ability of their nest egg to support their future needs. Davis challenges the idea of a ‘magic number’ for retirement, emphasizing the need for a personalized income plan tailored to individual financial situations, risk tolerance, and retirement goals.
Retirement isn’t just about covering basic living expenses; it’s also about enjoying leisure activities and hobbies. Davis highlights the importance of safeguarding your nest egg by implementing a sustainable income strategy, emphasizing the risk of depleting retirement savings too quickly during market volatility. Studies show that one of the biggest fears of retirees is outliving their money, making a reliable income plan crucial for maintaining independence and avoiding financial dependence on loved ones.
While Social Security is a common source of retirement income, Davis warns against sole dependence on this government-sponsored program due to its uncertain future. With the Social Security Board of Trustees projecting a reserve depletion date in 2034, additional sources of retirement income are imperative to supplement potential reductions in Social Security payments. Davis suggests creating a personal pension with fixed indexed annuities (FIAs) to generate a guaranteed income stream that cannot be outlived, similar to traditional pensions but with added benefits like principal protection and market-like gains.
Davis provides steps to help individuals build a customized income plan for retirement, starting with evaluating expected expenses during retirement and identifying potential sources of income like Social Security, pensions, and personal savings. Consulting with a licensed financial advisor experienced in creating personalized retirement plans is crucial to assess current financial situations, risk levels, and suitable investment options for generating necessary income during retirement. With a solid income plan in place and expert guidance from a financial advisor, individuals can enjoy a stress-free retirement focused on what truly matters to them.
Opinions expressed are those of the author. This information is not investment, tax or financial advice. Readers are encouraged to consult with a licensed professional for personalized advice regarding their specific financial situations. The Forbes Finance Council, an exclusive organization for executives in accounting, financial planning, and wealth management firms, provided insight into retirement planning and income strategies for a successful and worry-free retirement.
