Money Matters

How do I Plan My Retirement Income?


Recent retirees are facing a major challenge that many of their parents never had to face. They need a steady income to maintain their lifestyle but fear exposing their assets to unnecessary risk. While previous generations of workers had the benefit of a pension from work or military service, many of today’s retirees do not enjoy such a luxury. Although Social Security will be a source of retirement income, you may also need to consider other options to maintain a reliable income while keeping investment risk in check. Here is a breakdown of 3 the most common options, along with positive and negatives aspects of each.

  • If you want the predictability of a pension being deposited into your checking account each month, you may consider using an  Immediate or Deferred Annuity. These are available through most insurance companies and are a contract that pays a guaranteed income stream for a specified time over one or two* individual’s lives. (*for married couples) These have many different options to meet a retiree’s income needs and may be set up to begin immediately, or deferred for a few years which may allow the amount of your income to be greater if you wait.

Positives: Guaranteed income for life; predictable and stable income

Negatives: Deposits are no longer 100% available to the insured* … they are taken as monthly payments for the life of the annuitant. (*in some cases up to 50% may be taken as a lump sum depending on the insurer)

  • If it concerns you to have your money in an account that is not available to take back as a lump, a simple solution may be to open an investment account and start a Systematic Withdrawal Plan. Such a plan can be established in nonretirement and retirement accounts with a form instructing the investment company what sum to distribute monthly, quarterly or annually.

Positives: You decide how much and when to take distributions, you keep control of your money

Negatives: You don’t get the guarantee of an annuity and the withdrawals may eventually run out depending on market returns and longevity

  • While both examples above represent taking some portion of your principal as income, another income source can be Bond Interest and Stock Dividends that pay on an annual or quarterly basis. This strategy allows you to control your principal investment by buying a portfolio of assets and taking only the income generated from those assets. Although the probability of receiving a regular income from these investments is fairly high, there are no guarantees that the income will continue to be paid or that your principal will be safe due to the volatility of the market.

Positives: Control of original principal, high probability of steady income, possible tax advantages

Negatives: Principal is at risk, unpredictability of equity and debt markets valuation, income is not guaranteed, low interest rate environment 

 There are many ways to achieve your financial goals. The worst thing you can do is to go through this process alone. Seek the advice of a qualified financial professional who can explain all of your options and help customize those that are right for you.

screen-shot-2016-09-27-at-10-13-52-pm-R. Heath Morris, CFP®screen-shot-2016-09-27-at-10-14-35-pm

Vision Financial Group

4505 Pine Tree Circle, Birmingham, AL 3524



Prepared by Broadridge Investor Communication Solutions, Inc. Investment Advisory services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor. Securities offered through ProEquities, Inc., a registered broker-dealer and member of FINRA & SIPC. Vision Financial Group, Inc. is independent of ProEquities, Inc.

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