The Retirement Income Dilemma

You may have had to tap into your portfolio during your working years for college costs, a home upgrade, or some other major purchase or expense. When that outlay was unexpected, hopefully it wasn’t right after a stock market downturn, and, hopefully, you had time to recover before you reached retirement.

You may be wondering what the best time is to start your Social Security. Perhaps you have a pension decision to make. Should you take the income stream or roll over the balance into an IRA?

Most people spend their working years accumulating wealth ... rarely thinking about turning their savings into a paycheck after they retire. Now, if you are close to retirement or are already there, this new phase of life requires a totally different approach to managing your money.

You’re no longer just climbing Mount Wall Street. You have reached The Retirement Income Dilemma.

How do you turn your portfolio into the stream of income you're going to need every year to supplement your other sources of income, such as Social Security, rental income, or a pension?

The money you had growing while you were working now has an entirely new job - providing you with consistent income, while combatting inflation all the while.

However, the dilemma with “decumulating” from your investments is this: The stock market, which had been great for growing your money, is not so good at producing the dependable, increasing income you need in retirement.

You see, most stock dividend payouts remain very low, so you would need to have a lot of shares to provide enough income. Preferred stocks offer higher dividends, but you still need to have a lot of shares to provide the income you need.

If the dividends are enough to supplement your other income sources, you may not have to be concerned about stock market volatility or read the rest of this post.

But you must understand, there will be several more downturns of 20% to 30% in your future - probably 5 or more. Those 20% drops occur every 5 1/2 years on average. Can you stomach that if you need to tap into your portfolio to pay your bills?

Bonds in your portfolio may pay a fair amount of interest, but they can lose a lot of value when interest rates rise as they have been. That’s not a big issue unless you need to sell the bonds before they mature (when the principal is paid out to you).

A 1% increase in interest rates can result in about a 10% decline in the value of the bonds you own. That's a high likelihood these days.

What about bank interest? Even if you are earning as much as 1%, it would take about 72 years for your money to double! If the average inflation rate on your living expenses runs at 4% a year, those costs will double in about 18 years.

Money you hold in cash over what you need for emergencies and short-term spending is losing purchasing power everyday.

Proper preparation can remove all of the guess work and uncertainty of having an effective retirement income strategy that will pass the test of time and allow you to focus on the things you'd rather be doing.

See how you can solve your Retirement Income Dilemma once and for all. Learn how you can have dependable, predictable retirement income that does not depend on the stock market for any of it, have that income increase over time, allow you to maintain as much of your principal as you would like, and have flexibility to adapt to changing circumstances.

Check out this 5-minute video to learn how: Click here.

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