Two strategies for making retirement savings last — probability-based income planning and guaranteed income planning — can help ensure you have what you need in your golden years, but which is right for you?
Two very different strategies can help retirees’ retirement savings last their lifetime, and the one that works for you, or even a hybrid plan, may depend on your tolerance for risk. Let’s look at probability-based income planning vs. guaranteed income planning.
You can probably guess the types of questions financial advisers hear most often from hopeful retirees. They tend to go something like this:
“When can we retire?”
“How much will we need?”
“Will we have enough?”
“What if there’s a major health care, stock market or inflationary event that threatens what we’ve saved?”
I wish there were simple answers to those questions (which are all variations on the same theme, by the way). I guess if I had to pick one answer, it probably would be: “Well … let’s take a look.”
And then I would start asking my own questions.
The aim, of course, is to convert your pile of money (your nest egg) into a reliable retirement income stream that will last as long as you do. But there are two very different strategies – probability-based income planning and guaranteed income planning – that can be used to get retirees to that goal.
And the one that’s the right fit for you may depend largely on your attitude toward risk.