Determining the best retirement income streams for your portfolio
Social Security helps people have some funds they can rely on during their retirement, but it is usually not enough to cover most living expenses. That is why many people invest in a retirement plan that helps them build a nest egg that they can use to live off of.
Still, you might need to generate an income stream to help protect your nest egg during difficult seasons or a volatile market. The best retirement income stream for one person might not be the best option for the next. It is worth exploring your options to consider how they apply to you and how they can benefit your retirement living.
An immediate annuity is an agreement with an insurance company to generate a guaranteed income almost immediately in exchange for a lump sum of money. You can choose to earn your income on a monthly, quarterly or annual basis.
How much you earn on your regular payments depends on how much you have invested, how frequently you receive payment and other factors like:
- Your age
- Interest rates
- How long you will continue to receive payments
Immediate annuities can be a gamble. If you pass away before reaching the end of your agreement, you never get your money’s worth. However, if you still have many years ahead of you, you can earn money off of this investment. It is best to talk to your financial advisor about whether or not an immediate annuity is right for you.
A bond is a loan that you give to a government or corporate entity in exchange for regular interest. Once the bond has matured, you receive its face value back to you. You can generate a regular flow of cash by purchasing bonds in staggered intervals.
Most bonds make interest payments bi-annually. So, by staggering the payment dates of multiple bonds, you can generate a steady inflow of cash because payments are locked to the time of your purchase.
A financial advisor can help you identify bonds which are beneficial for you to invest into and can help you make a laddered strategy to stagger your interest returns.
Laddered certificates of deposit (CDs)
A certificate of deposit, or CD, is a type of savings investment that earns a fixed rate over an agreed-upon period of months or years. The agreement is that you cannot touch the money you place into your CD until it has reached its maturity. The benefit is that the interest a CD generates is guaranteed not to fluctuate. With this product, you know for certain how much to expect to earn when you receive your investment back and its interest on a CD’s maturation date.
Similar to laddering bonds, you can build a laddered CD strategy with which you stagger your CD purchases and their returns. Interest on CDs are generally not as generous as interest on bonds, but they are an excellent conservative option for those with a lower risk tolerance or who are not interested in more aggressive strategies.
Determine your retirement income stream with the help of a ProVise financial advisor
These are just a few examples of the types of income streams you can generate with your retirement funds. The CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group are here to help you identify which methods work best for you, so you can focus on enjoying your retirement now instead of worrying about the future.
Our ProVise financial advisors take the time to get to know you, your circumstances, your risk tolerance and your goals. We can analyze your current circumstances and goals to create a plan for you at a fiduciary standard of care. We also offer an unconditional money-back guarantee if you are unhappy with your written plan. Simply return it to us and we will refund 100% of the fee paid.
Are you ready to take your retirement to the next level and invest in a retirement income stream? Contact ProVise today to schedule a complimentary consultation.