Planning for the “autumn of our lives” is essential. With increasing longevity and a constantly rising cost of living, retirement portfolios have to produce growing income for a very long time. Making money last for thirty years or more is not easy for individual investors or professional money managers. Without a plan you’re at a steep disadvantage.

Running out of money in retirement is not just a factor of how much you start with. Your odds are calculated based on how much your retirement assets can earn and how much you will need to withdraw from the pool each year. Until recently 4% was a “safe” annual withdrawal rate but today it’s only about half that because in this age of financial repression it’s simply very hard to make money on your money, no matter how much you have. Then there’s volatility and bad timing: losses can knock any portfolio for a loop and send the plan it supports reeling. That’s when your advisor may tell you to tighten your belt until your portfolio recovers, which won’t be easy when you’re living off it.

Pre- and post retirees whose plans call for withdrawals greater than 2.5%, or who prefer insurance guarantees to the potential returns and corresponding risks of stocks and bonds, are sometimes well advised to consider annuities.   Backed by the financial strength of the insurance companies issuing them, many annuity contracts are designed to manage longevity risk by guaranteeing income you cannot outlive. Some also offer innovative investment features. When deemed appropriate, a well-rounded advisor can combine securities and annuities that complement one another for best results.

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