The retirement road trip: Got enough gas?

4 MIN READ | #blog

American workers are underfunding their retirement savings by at least $6.8 trillion, according to the National Institute on Retirement Security. In addition, 37% of Americans are considering delaying retirement.* Hardly a news flash, right? We’ve all had that moment where it seems impossible to believe that what is in our retirement account will fund 30 years or more of life, never mind lifestyle.

The question is, what to do? There are many ways to plan for retirement. The thing to remember, first and foremost, is that you have the power to reduce or eliminate your personal retirement gap if you understand a few key principles for your retirement road trip.

First, it’s helpful to think in terms of monthly expenses. Second, we need to acknowledge we cannot count on our employers to fund our golden years. Third, we need to understand that the future of social security is uncertain.

Why are these key principles important? Because they help you to envision a clear picture of retirement, and if you are to see the risks now, you can better counter them for the future. Here are three of the big ones to consider.

Longevity risk

Sounds like an oxymoron, doesn’t it? Like jumbo shrimp or virtual reality. Longevity risk is the probability that you’ll outlive your assets and your income stream will become a mere trickle unable to support you and/or your lifestyle.

Market risk

The market goes up and down. The younger you are, the further you are from needing to draw down your retirement income and thus the longer you have to “bounce back” from a market downturn. But as you age, a dip in the market when you draw from your investments for income could deplete your assets faster than you want and possibly not last your lifetime.

Inflation risk

What day do you spend the most money? If you say Saturday, you are correct. Well, guess what? When you’re retired, every day is Saturday. That’s what makes it so great. You will have more time to spend, but the activities you enjoy today will likely cost more in the future, due to inflation, and you will spend more time doing them. Inflation risk is very real and has an even greater impact when your income becomes fixed during retirement.

To visualize what you’ll be doing in your second-half and to find a way to make it a reality, check your retirement reality.

Planning for the retirement road trip

An antidote to help you overcome the three risks is to devise a retirement savings plan that includes guaranteed income payments for life. You’ve heard that life is a journey? Well, it’s really an epic road trip, and you don’t want to run out of gas, cheesy puffs and soda during the last leg. To ensure you have a full tank for the entire ride, you might want to explore a lifetime income annuity.

A guaranteed source of fuel

A great retirement is knowing you can enjoy the life you imagine. A lifetime income annuity can create a fixed stream of guaranteed income. If you choose, the income could last for a specific period of time or for your lifetime. Here’s how it works: Basically, you pay a lump sum of money, or a set number of payments over time, in exchange for a guaranteed payout for life.

First, an annuity can mitigate the longevity risk because you continue to receive payouts no matter how long you live. Second, market volatility can become a non-factor because the fixed payout is not affected by market fluctuations. Third, inflation risk can be lessened because you have the flexibility to customize your income stream at different periods of your retirement years as your expenses grow or decline.

As with any facet of retirement planning, there are many things to consider, including the cost and terms of the annuity and the reputation of the company behind it. Talk to a financial professional who can help you to weigh the pros and cons and to develop a plan that matches your goals and lifestyle. With the right investment vehicle, you can make it to your destination in style.

Curious what your journey might look like? Find out here.

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2021-122885 Exp. 06/23

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* Guardian’s Living Confidently survey, 2017.


Annuity contracts are guaranteed solely by the strength and claims-paying ability of the issuing insurance company. This material is intended for general public use. By providing this material, Guardian is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial professional for guidance and information specific to your individual situation.