Dr. Pfau's Advice on How to Retire in a Low Interest Rate Economy

Continued from page 2...

In many instances, annuities will also allow you to choose an inflation option for your income payout so that the income that you receive will rise over time. This feature can work to help you in combating the inflation risk factor.

One of the biggest issues facing both retirees and financial advisors today is determining how to best convert savings into enough income so that it can fund a comfortable retirement, and also last the remainder of an individual or couple's lives.

In the past, retirement income strategies such as the "4% Rule" - where you would withdraw 4% of your savings and allow the remainder of the funds to continue growing - were often used, based on a portfolio that was adequately balanced between equities and fixed income investments.

Testimonial Image
We wanted to establish a bit of extra income. There was a good recommendation about ImmediateAnnuities.com on CNN. We also liked that we could see excellent reviews about them on Google. They were very thorough from our first inquiry to when we decided to buy our annuity from Mass Mutual. They always answered our questions promptly and followed up with the insurance company, too. We have been receiving our monthly payments since last November and couldn’t be happier. What more can we say?
Keith and Samantha Isley
Read 650+ verified reviews

But today, given the historically low interest rate environment, coupled with an unpredictable stock market, Pfau along with many financial planners and experts are rethinking this method, as it could essentially lead you to run out of savings.

How much money should you be saving or investing for retirement?

Certainly, one of the biggest questions on most peoples' minds in any environment is how much should you be saving. Here, there are several parameters that you need to think about, Pfau believes, because there isn't just one, clear-cut answer for everyone across the board.

These criteria include what your retirement spending goals will be - in other words, you need to get an idea of how much you will be spending on housing, food, utilities, etc. after you retire. You will also need to determine at what age you plan on retiring.

Then add up all of your approximate living expenses. At that point, you will know about how much you will need to save.

You can then start to factor in your potential income sources. For example, how much will you have coming in from sources like Social Security, a pension, or other avenues? Pfau said you could also consider putting money into an annuity so that the payouts from that cover your essential spending.

Do you have more questions about annuities and how they could fit into your retirement income strategy? Contact us now at (800) 872-6684. We’re here to help!


We'd love to hear from you!

Please post your comment or question. It's completely safe – we never publish your email address.

Add a new comment: (Allowed tags: <b><i>)

Comments (0)

There are no comments yet. Do you have any questions?