What’s your strategy for retirement? Is it based on your unique needs and goals? Or is it based on general ideas and conventional retirement wisdom?
 
There are plenty of “experts” online offering retirement wisdom for the masses. In fact, if you search “retirement” on Google, you’ll find more than 880 million results with retirement tips and strategies.
 
The problem with retirement advice for the masses is that it’s not customized to your unique goals. There are plenty of pieces of conventional retirement wisdom that aren’t right for every person or situation. Below are two examples of common retirement income rules and tips that may not be right for you:

You should plan on taking 4% withdrawals from your savings to fund your retirement. 

There are many “back-of-the-napkin” formulas meant to simplify retirement planning. One of the most common is the idea that you can take 4% of your assets as income in retirement. The idea is that if you withdraw 4% each year, your assets will last at least 25 years.
 
There are a few problems with this idea. The first is that not everyone will spend money the same way in retirement. You may want to travel or pursue other activities in the early years of retirement. Some people may need to provide support to children or grandchildren. And some will face costly healthcare issues. Not everyone’s spending is the same.
 
This rule also doesn’t account for inflation. It’s unlikely that your spending will stay the same year after year, making it unlikely that you can take the same withdrawal each year.
 
A better approach is to develop a custom budget and spending plan and then implement a strategy to meet your income needs. You also may want to consider financial vehicles like annuities that can provide guaranteed* income to help you meet your goal.
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You will spend less in retirement than you do now. 

Another common piece of retirement advice is that your spending will go down after you retire. Perhaps you’ve heard the idea to plan on spending 80% of your current spending in retirement.
 
Again, the problem with this advice is that your spending will differ from others. Many retirees see their spending increase after they stop working. They fill their free time with travel, shopping, dining out, and other activities that cost money. In the later years of retirement, you could see your medical expenses rise as you face healthcare issues.
 
You may see your spending in certain areas decline after retirement, but that doesn’t mean your overall spending will go down. Consider building a retirement budget that is specific to your goals and your plans. That will give you a better idea of how much you may spend in retirement.
 
Ready to develop a retirement income plan that is specific to your needs and goals? Let’s talk about it. Contact us today at Cornerstone Financial Associates. We can help you estimate your income need and implement a strategy. Let’s connect soon and start the conversation.
 
 
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20024 - 2020/4/22

You may see a new figure on your 401(k) statement soon. In December of last year, President Trump signed the SECURE Act, which stands for Setting Up Every Community for Retirement Enhancement. The bill’s goal was to make it easier for Americans to save for retirement.
 
One of the provisions in the bill changes the way 401(k) administrators report account balances to participants. At some point soon, your statement will not only include your account’s balance, investment performance, and other traditional information, but it will also include a projection of your future monthly income.
 
The change is designed to give you another perspective on your progress toward retirement. It’s often difficult to estimate your readiness by looking at a lump sum amount. However, if that lump sum is translated into monthly income, you may get a better idea of whether you’re on track to meet your goals.If you aren’t on track, the good news is you can take action. Below are two steps you can take to enhance your retirement income:

Increase your contributions. 

In 2020, you can contribute up to $19,500 to your 401(k). If you are age 50 or older, you can contribute an additional $6,500, bringing your total potential contribution to $26,000.1
 
Of course, you may not be able to contribute that much this year. Even a modest increase can have an impact on your savings and your future retirement income. One strategy is to gradually increase your contributions over time. Start by increasing your contribution by 1% each year. Eventually, you’ll be contributing the maximum amount.

Guarantee your income. 

Another strategy you could implement is to strategize with products that provide guaranteed income in retirement. The SECURE Act makes it easier for 401(k) plans to offer annuities as a strategy option. These vehicles often provide guarantees on retirement income.
 
For example, you may be guaranteed to withdraw a certain amount of income for life, regardless of how the markets perform or how long you live. That could help you minimize risk and protect your cash flow in retirement.
 
Ready to boost your retirement income? Let’s talk about it. Contact us today at Cornerstone Financial Associates. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20021 - 2020/4/22
 
 
Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged.  Annuities are long-term, tax-deferred vehicles designed for retirement and contain some limitations.

Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC.