This is a sponsored post for Prudential.
Like many women my age, I am years away from retiring but that does not mean I can or should avoid the topic. The term “ignorance is bliss” is definitely not all its cracked up to be- if as a result you are a senior citizen who is unprepared for retirement. I want to be ready when the time comes and learn as much about it as I can.
I recently attended an event on behalf of Prudential to learn more about protecting my retirement which featured the Alliance for Lifetime Income’s (of which Prudential is a founding member) virtual reality truck, an Octoberfest, DJ and more interactive stations. It was great to be able to hang out at the truck and learn all about what the Alliance for Lifetime Income has been doing to raise awareness about the need for retirement income planning. Prudential is promoting a greater understanding of how annuities can help protect and grow retirement savings.They want to help consumers make informed decisions, with help from their financial advisors, about retirement. Women need to find ways to generate regular, reliable monthly income in retirement and not simply count on living off accumulated savings from 401(k)s and other savings vehicles; especially because they are living longer!
Find out more in this video interview I did with Melissa Kivett, from Prudential:
Check out this fun video I did at the event:
Everything You Need to Know About How to Protect Your Retirement
I learned several important ways to protect my retirement and create a strategy to generate lifetime income as a result of my partnership with Prudential and my attendance at their events. I also learned that retirement income has changed a great deal in the past three decades. Pension and Social Security used to make up the larger portion of most people’s retirement savings, but now pension and Social Security can actually be the smaller portion of our retirement income, and our savings are the greater portion. In other words, we can no longer depend on pensions of the past, which are no longer offered to most working people, and while Social Security is good, it will also not be enough. What does that mean for women?
What we all need in addition to these IRAs and 401K savings vehicles is a way to get our own predictable income in retirement and this may include annuities.
Here are a few reasons why traditional savings vehicles like IRAs and 401Ks pose certain risks to one’s retirement nest egg and portfolio.
#1 The imbalance between the percent of money one spends in retirement as opposed to what one adds to their portfolio is the biggest risk to your retirement savings and income.
#2 The market risks. You could retire into a bear market as opposed to a bull market; in retirement you don’t have time to recoup losses that may occur and you might run out of money before the market comes back.
#3 Low interest on savings. In the past you used to be able to get a 5% interest rate but now it is only 2.5-3% – which adds another pressure on your retirement savings.
#4 Investor behavior. As investors, sometimes we make bad choices such as getting into the market after it has gone up and getting out at the bottom after it has gone down. It has been shown that the average investor underperforms the market historically.
#5 Inflation affects how well our money will last. Cost of living for goods and services goes up 2.6% per year and this is even higher for retirees due to healthcare costs. Medicare costs $5,000-$5,500 per year per person.
#6 We are living longer so our money has to last longer. There is a 50% chance men will live to 87 and a 50% chance women will live to 90. What does that mean for us women? We need to plan for a 25-30 year vacation! The withdrawal rate on your savings used to be estimated at 4% but now needs to be less something more like 2.4-3.5%.
So what can you do to Protect Your Retirement?
Guaranteed income streams help you manage your risk and these include a pension, social security or possibly an annuity, which can help get you through retirement. In other words, we have to focus less on the cash pile and more on a cash flow. Did you know an annuity could provide a guaranteed “paycheck” for life and a reliable source of income? Guaranteed income from an annuity can help cover income gaps in retirement. A Prudential annuity can provide a guaranteed income stream for as long as you live, which can give you valuable peace of mind.
How can you manage all the risks to retirement savings?
You can avoid the market, stay in it and hope for the best or you can transfer some of that risk to a financial vehicle with a guaranteed income stream. Make sure your essential expenses are covered by guaranteed income and keep the non-guaranteed in longer-term investments to mitigate market risk and use that for discretionary spending.
I learned a lot about how my costs including health care will be going up and will be affected by inflation. But I also learned some of the ways I can manage risk during retirement. This may include investing in an annuity, which can provide a guaranteed income stream – which I will need! Are you ready to protect your retirement? Work with a Prudential financial professional to help create a strategy for steady, protected lifetime income and learn more about Prudential annuities. Click here to set up a complimentary meeting with a Prudential financial professional today.