We recommend layering two income streams to ensure a steady retirement income: social security and an annuity with a guaranteed lifetime income rider. This layered approach ensures that money is there when needed and helps cushion inflation.
Annuity With Income Rider (Income Stream #1)
An annuity with a lifetime income rider can be just the financial security you need for retirement. This type of annuity assures investors that their investment will continue to pay them a fixed income throughout their lives. It is a desirable option for those concerned they may outlive their retirement savings, as it offers peace of mind knowing their investments will always provide income.
Level Income Option
At age 71, an annuity with a lifetime income rider will generate $66,000 starting at age 72 (highlighted in green) and for the rest of their life. After that, any remaining balance will pass down to beneficiaries. Notice the lifetime income continues to pay the same income after the account has been spent down to zero (highlighted in red).
Increasing Income Option
At age 71, an annuity with an increasing lifetime income rider will generate roughly $4,745 a month starting at age 72 for the rest of their life with the opportunity to increase the monthly payment.
Social Security (Income Stream #2)
Social Security Benefits will provide your spouse a guaranteed income and survival benefits when you die. However, your social security income will depend on your earnings history and the age at which you begin receiving benefits.
At age 72, if you’ve worked for 35 years, you can expect to receive around $2,700 monthly from Social Security, with a potential increase of up to 8% each year due to cost-of-living adjustments.
Although retiring from full-time work means you may no longer need to pay for health insurance, healthcare and long-term care expenses can add up quickly. For many individuals, the highest cost of retirement is money spent on medical care.
To ensure these costs are as manageable as possible, using resources like Medicare and a long-term care policy is essential. By utilizing both sources of coverage, retirees can save on the high cost of care to enjoy their retirement years without worrying about paying hefty bills.
Medicare covers hospital visits, doctor visits, preventive care, durable medical equipment, and prescription drugs. With the right plan, retirees can receive quality care from healthcare providers of their choice. To have complete security for health-related expenses into retirement, seniors should research the advantages of enrolling in a comprehensive Medicare plan.
According to the United Department Of Health and Human Services (HHS), retirees have a 70% chance of needing long-term care at some point in their lifetimes, but what’s even more daunting is that such care can be expensive. Therefore, older people should be aware of this situation to prepare financially for its potential occurrence.
Long-term care insurance supplements the cost of a nursing home, assisted living facility, or home health care, which can quickly deplete your savings and become costly.
LTC Life Insurance (Option #1)
Asset-based life insurance is designed to pay for long-term care expenses and is structured so that $5,539 a year for 20 years could generate $100,000 in LTC benefits. Furthermore, any remaining balance will be passed tax-free to the beneficiaries.
LTC Annuity (Option #2)
Long-term care annuities will double or triple your investment to pay for a nursing home, assisted living facility, or home health care. In this example, we took $50,000 of the $800,000 to purchase this annuity which could generate $100,000 or $150,000 in LTC benefits. Any remaining balances will pass down to beneficiaries.
Traditional LTC (Option #3)
Traditional long-term care insurance is a “use it or lose it” insurance. With that said, as little as $109.75 a month would provide $100,000 in LTC benefits, with a maximum monthly benefit of $2,000.
Estate planning is crucial because it helps you plan for your future. It can help you decide how to handle money, property, and other things when you are gone. Estate planning can also help ensure your family gets the money and other things they need when something happens to you.
At age 71, a 10-year term life insurance could cost as little as $190.06 a month.
Final expense insurance is a “must-have” insurance because it helps your family pay for funeral costs when you are gone. At age 71, a monthly burial insurance policy can cost as little as $80.28.
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Any money left over after paying for healthcare and long-term care expenses should be invested safely and securely to maximize growth potential. A few ways to invest after retirement include fixed and index annuities.
A fixed annuity provides the investor with a guaranteed interest rate for a set period, similar to a certificate of deposit (CD). However, unlike CDs, fixed annuities offer liquidity and higher interest rates.
Fixed Indexed Annuity
A fixed-indexed annuity allows retirees to grow their savings based on a stock market index like the S&P 500 and Nasdaq while protecting their principal balance from the volatility of the markets. This type of annuity allows retirees to benefit from market gains without taking on the risk associated with traditional investments.
Retirement planning may seem daunting, but it doesn’t have to be. With some knowledge and guidance, you can make the most of your money and retire next year at age 72 with only $800,000. So, whether you’re just starting your career or already retired, read on for helpful tips to get you closer to your retirement goals! If you need help getting started, contact us for a quote. We’d be happy to provide personalized advice that fits your unique circumstances.
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