Make Your Money Work for You

Make Your Money Work for You

March 18, 2021
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Turning Retirement Savings into Retirement Income


A comfortable retirement means different things to different people, but one universal definition could be the ability to maintain your lifestyle when you’re no longer drawing a salary. This doesn’t consider the many other things that might define your retirement (things like owning a business or pursuing different types of work). Still, one of the big needles to thread when considering your retirement is: What will be the source of your money?

If you’re in the workforce and retirement is still on the horizon, you probably have some ideas about where and when that money will enter your life. Your retirement strategy likely uses some combination of tools or activities with the intent of building wealth toward the day when you’re no longer working for a living. While these tools may be good at accumulating money, your strategy’s design may not necessarily let you take out retirement income in a thoughtful and deliberate way.

So, while you may have a retirement savings strategy in place, you may want to develop a separate strategy when it comes to distributing your retirement income.


Devising Your Retirement Distribution Strategy

The money put aside for your golden years may have two jobs: sustaining you for the rest of your life and leaving a legacy for your loved ones. According to the Employee Benefit Research Institute’s 2020 Retirement Confidence Survey, 69% of American workers have confidence in their ability to see steady income throughout their retirement. However, that number sinks to 27% when asked if they are “very confident.” You may even have that concern yourself, and it’s important to remember that it isn’t an unreasonable concern. The good news is that, with the right information, you may be able to make informed decisions about how long your money needs to last.1

One of the reasons financial professionals get to know their clients so closely is that we need a clear sense of who you are to help form wise strategies. Among those key data points is your life expectancy. While it may be uncomfortable to think about, your life expectancy represents one keystone in the design of your retirement distribution strategy.

With that timespan in mind, the next step is examining where you’re at with your money. Your retirement plans play a role. Other critical factors are Social Security and how much income you expect to receive from month to month.2


Turning Savings into Income

Turning a growth plan into a retirement income plan can occur using certain assumptions. In this example, a hypothetical investor (let’s call her Veronica) has accumulated $500,000 by age 52. Veronica wants to see how that could help generate a portion of her retirement income. Applying a hypothetical 6% annual return, Veronica’s $500,000 portfolio would increase to $1.2 million by age 67.

Veronica’s portfolio is structured to earn a hypothetical 4% annual return starting at age 68. She could take a $50,000 annual distribution, increasing that distribution by 3% each year until age 90. After her 90th birthday, Veronica’s portfolio will have generated $1.7 million in total income, and she will still have $400,000 to distribute to beneficiaries.


*This illustration provides estimates based on certain assumptions. It is not intended to provide specific investment advice. The results are not a guarantee of performance or specific investment advice. The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for high returns also carry a high degree of risk. Actual returns will fluctuate. The types of securities and strategies illustrated may not be suitable for everyone.


Turning a Growth Plan into an Income Plan

There’s no shortage of things to consider when shifting from a saving-focused strategy toward an income strategy.

It’s important to remember that once you reach age 72, Required Minimum Distributions (RMDs) begin to apply to IRAs and other retirement products. Failure to take the RMD by the end of the year may result in an “excess accumulation” penalty. RMDs at 72 also apply to your workplace retirement account, but you also need to wait until you reach 59½ before taking any withdrawals or face a 10% tax penalty.

As part of the SECURE Act, workers over 72 can still contribute to an IRA or other retirement account, depending on specific circumstances.

As time goes by, it’s crucial to have a perspective on inflation. The future may cost much more than some people anticipate, which accounts for our elders’ fondness for remembering when a loaf of bread cost a nickel. Approaching retirement means preparing for not only your healthcare, but also your legacy. Establishing what you want to happen to your wealth after you pass can involve setting beneficiaries and many other careful decisions.

Spinning All the Plates

As you look to the future, you might be overwhelmed by it all. It might feel like you have the job of keeping all the plates spinning. It can be tough enough to keep just one aloft, let alone dozens. Creating a financial strategy means thinking about the bigger picture, including various issues like monthly income needs, handling unexpected expenses, and preparing for healthcare costs.

Thankfully, your financial professional works with you to develop and enact your financial strategy. Doing it alone doesn’t always go well; people who take a “do-it-yourself” approach can quickly find themselves overwhelmed by all the variables they need to consider.

Remember, you’re not alone. We’re here to help you turn your collection of financial resources into a comfortable retirement, to offer guidance and suggestions on how to stretch your money across your golden years, and even to help you build something for your loved ones. It’s a privilege we don’t take for granted.



  1., November 11, 2020
  2., November 11, 2020

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.

Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The content is developed from sources believed to be providing accurate information. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.