View Mobile Site
zone code Advantage Code _
 

Ask the Expert

Signal Photos

 

Learning the 'new math' of retirement

Posted: September 29, 2008 3:46 p.m.
Updated: December 1, 2008 5:00 a.m.
 

With the normal challenges of retirement planning and the current financial crisis adding pressure to your planning, will your retirement portfolio be able to maintain your current lifestyle?

What is a sustainable withdrawal rate that won't deplete your life savings over time? These are difficult questions to answer, especially during these turbulent times.

Not only is there pressure sustaining your current standard of living in retirement, but may also affect your secondary goals for bequests, charitable giving and planning for future generations.

The "new math"
The new math of the distribution phase challenges conventional accumulation money-management principles.

The sequence of returns and downside resilience are critical factors in retirement portfolio success. Our current crisis will put pressure on withdrawals of the most proven formulas.

Withdrawal rates
The single biggest criteria for success in the distribution phase is creating a sustainable income stream while preserving your desired lifestyle.

Many experts have conducted research on this topic. While no definite answers exist, the conventional wisdom is that 4 percent represents a safe withdrawal rate for a long retirement. With our present longevity, it is recommended that 4 percent can help assure a sustainable income for at least 25 years.

If you withdraw 6 percent, your odds of sustaining income are greatly reduced.

Lose the guesswork
If you are concerned about outliving your income, the rising cost of inflation, market volatility and maintaining control of your assets, you may want to ask your financial adviser if a variable annuity is right for you.

A variable annuity is a long-term investment vehicle specifically designed for retirement. It allows you to accumulate assets on a tax-deferred basis and then turn your assets into a stream of income or transfer it to your heirs.

Its valuable combination of benefits and optional protection features can help you manage risk with more confidence and protect the nest egg that you have worked so hard to build.

Most important, it can provide a lifetime income stream you can't outlive and help you have peace of mind and confidence of continued income no matter how long you and your spouse live.

Discuss with your financial adviser if a variable annuity will fit into your financial planning.

It can help in providing the "new math" to your portfolio.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investment, located in Santa Clarita. His column represents his own views and not necessarily those of The Signal.

Comments

Commenting not available.
Commenting is not available.

 
 

Powered By
Morris Technology
Please wait ...