TAPPING YOUR RETIREMENT NEST EGG
TAPPING YOUR RETIREMENT NEST EGGposted: Monday, September 28, 2009 José Rigor, MEMBERS Financial Services Representative How much can you annually withdraw from your retirement savings with the least risk of running out of money? There's no easy answer to this question, especially since you may be depending on your money for some 20 to 40 years. Plus, it's hard to plan when there's no way to know what investment returns or the cost of living will be in the future. The exact amount you can withdraw depends on many factors specific to your situation including your other sources of income, how much money you have, and how your money is invested. However, studies published over the last few years in the Journal of Financial Planning do offer some guidance. In general, the studies say that if you want to be fairly confident your savings will last for the rest of your life, through both good and bad economic times, you should limit your annual withdrawal rate to a conservative amount. The studies generally suggest two alternate withdrawal methods. One method is to initially withdraw about 4% from a diversified portfolio and then annually increase that amount to keep pace with inflation. This may seem like a limited amount, but you have to start with a low rate so you can increase withdrawals each year for inflation. A second method is to withdraw a fixed 5% each year with a ceiling and floor on the amount you withdraw, so the actual amount is dependent on your investment returns. By always withdrawing a fixed percentage from your remaining savings, you're forced to adjust your spending along with your portfolio's performance. Most importantly, whether your money actually lasts depends on your actual investment returns and how much your expenses increase. One way to make sure that you have money coming in is to turn part of your savings into a stream of income guaranteed to last for the rest of your life, or for both your life and the life of a loved one. You can do this by annuitizing a deferred annuity you already own or by buying a payout annuity with part of your savings. José Rigor is a Financial Advisor with Members Financial Services located at SAFE Federal Credit Union. For more information about retirement income planning, you may contact José at 803.469.8600 extension 346. Representatives are registered, securities are sold, and
investment advisory services offered through CUNA Brokerage
Services, Inc. (CBSI), member FINRA/SIPC, a registered
broker/dealer and investment advisor, 2000 Heritage Way, Waverly,
Iowa 50677, toll-free (866) 512-6109. Nondeposit investment and
insurance products are not federally insured, involve investment
risk, may lose value and are not obligations of or guaranteed by
the financial institution. CBSI is under contract with the
financial institution, through the financial services program, to
make securities available to members.
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TAPPING YOUR RETIREMENT NEST EGG
TAPPING YOUR RETIREMENT NEST EGGposted: Monday, September 28, 2009 José Rigor, MEMBERS Financial Services Representative How much can you annually withdraw from your retirement savings with the least risk of running out of money? There's no easy answer to this question, especially since you may be depending on your money for some 20 to 40 years. Plus, it's hard to plan when there's no way to know what investment returns or the cost of living will be in the future. The exact amount you can withdraw depends on many factors specific to your situation including your other sources of income, how much money you have, and how your money is invested. However, studies published over the last few years in the Journal of Financial Planning do offer some guidance. In general, the studies say that if you want to be fairly confident your savings will last for the rest of your life, through both good and bad economic times, you should limit your annual withdrawal rate to a conservative amount. The studies generally suggest two alternate withdrawal methods. One method is to initially withdraw about 4% from a diversified portfolio and then annually increase that amount to keep pace with inflation. This may seem like a limited amount, but you have to start with a low rate so you can increase withdrawals each year for inflation. A second method is to withdraw a fixed 5% each year with a ceiling and floor on the amount you withdraw, so the actual amount is dependent on your investment returns. By always withdrawing a fixed percentage from your remaining savings, you're forced to adjust your spending along with your portfolio's performance. Most importantly, whether your money actually lasts depends on your actual investment returns and how much your expenses increase. One way to make sure that you have money coming in is to turn part of your savings into a stream of income guaranteed to last for the rest of your life, or for both your life and the life of a loved one. You can do this by annuitizing a deferred annuity you already own or by buying a payout annuity with part of your savings. José Rigor is a Financial Advisor with Members Financial Services located at SAFE Federal Credit Union. For more information about retirement income planning, you may contact José at 803.469.8600 extension 346. Representatives are registered, securities are sold, and
investment advisory services offered through CUNA Brokerage
Services, Inc. (CBSI), member FINRA/SIPC, a registered
broker/dealer and investment advisor, 2000 Heritage Way, Waverly,
Iowa 50677, toll-free (866) 512-6109. Nondeposit investment and
insurance products are not federally insured, involve investment
risk, may lose value and are not obligations of or guaranteed by
the financial institution. CBSI is under contract with the
financial institution, through the financial services program, to
make securities available to members.
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