Is the thought of losing money in retirement keeping you up at night? Your retirement income isn’t just about whether you can afford country club fees or your favorite stylist. When you’re retired, the amount of money you spent years saving has to cover your housing, health care costs, food, clothes, and basic needs FIRST – before you even start thinking about hobbies.

Every bump (big or small) in the markets can feel like a threat to your living expenses. That kind of fear and stress can stop you from enjoying a deep sleep, turn your stomach, and keep you from relaxing in your retirement the way you hoped.

If you’re constantly worrying about your income, you’re not alone! 87% of Americans are concerned about a lack of income in retirement.¹

News from the economic front doesn’t help! When a recession comes, the value of the money you have in the stock market drops. As you take money out to cover your living expenses, you find there’s less and less to withdraw.

And everything keeps getting more expensive, including things like gas and groceries that you need on a regular basis. You’ve seen how this kind of inflation can wreak havoc, because in 2022 the inflation rate, at 7.1%, was higher than it had been since the early 1980s.² And who knows when that kind of inflation shock will happen again?

When you don’t know how much income you’ll be bringing in every month, it’s hard to be sure that you can pay your bills and buy gas and food that month. Uncertainty when it comes to your money is frightening – but fortunately, there are some ways that you can steer clear of these retirement obstacles and avoid getting shipwrecked over things you can’t control.

Wealthy people know how to navigate these complexities, but you don’t have to be wealthy to use their techniques. They’re able to make their retirement income more predictable by making informed decisions about their money. While the wealthy have financial professionals to help them create a stream of retirement income, you may be able to build your own – and enjoy a good night’s sleep knowing you’ll have the money to cover expenses.

This guide to charting your own journey through retirement is designed for people who’ve saved their money, just like you, who want to ensure that their income will satisfy their needs in retirement.

You might be asking questions like:

• How much income will I receive each month?
• Is there a way I can help steady the money I have saved for retirement?
• Can I ensure I have enough money to cover my expenses, even many years into retirement?
• Do I have a plan in place to deal with potential stock market losses?
• Is there a financial professional who can help me with my retirement income questions?

If you’d like the answer to any of these questions, keep reading…

RETIREMENT RESCUE #1

“Bucketize” your retirement money

Although the stock market has a lot of ups and downs (and might be making you a little seasick when the ride gets rough!), stocks and stock mutual funds are ways to deal with costs that keep getting higher.

Gas, food, and clothing tend to increase in price on a regular basis … but so do stocks. Historical trends show that the S&P 500 rises 3 out of every 4 years.³

That means it’s a reliable investment to have some of your retirement money in stocks even after you retire, because costs can continue to get higher indefinitely.

However, that doesn’t mean that you have to leave all of your money in stocks. In fact, you shouldn’t!

There are three time periods that your retirement nest egg needs to cover:

• Near-term, or less than a year from now
• Medium-term, which is up to 7 – 10 years from now
• Long-term, which is 10+ years away

These three different time “buckets” are suited to different types of investments: cash for the near-term bucket, bonds and bond funds for the medium-term, and stocks for the long-term. That way, if a recession comes, you have buckets of cash and bonds that you can tap into for your income. Your withdrawals won’t affect your stock market holdings.

You can wait to sell your stocks at a time when they’re high instead of low, and refill your cash and bond buckets at that time. Plan to periodically refill the cash and bond buckets from your stock bucket to help you maintain your income no matter what the stock market does.

Important questions to ask include:

• Do my savings currently have money that can be used during those three time periods?
• How much of my money should be in each bucket?
• As I grow older, should I change how much is in each bucket?
• Is there a system I could use to keep the bond and cash buckets full?
• Am I able to run my bucket plan by a financial professional I trust?

RETIREMENT RESCUE #2

Make the right decisions on Social Security

Social Security is a key component of retirement for nearly all but the wealthiest Americans. The most recent data indicates that about 84% of Americans over 65 receive Social Security.⁴

As critical as Social Security is for retirees, there’s no specific age to start claiming.

The range is from age 62, which is the earliest you can take benefits based on your own work record, to age 70. That’s the latest you can delay receiving benefits. Everyone has a full retirement age (FRA) that’s based on their birth year. If you were born in 1960 or later, your FRA is 67.

If you take Social Security earlier than your FRA, you permanently reduce your benefits. If you delay taking it (up to age 70), you receive a permanent increase in your benefits. Whether it’s worth delaying your benefits past age 62 depends on how long you live.

If you live a long time, you’ll be better off delaying until age 70, because the increase you get will eventually outweigh the payments you would have received if you took them earlier. But how could you possibly predict how long you’ll live?

Also, whether you’re married or single can determine a good age for you to start claiming benefits.

The good news is that Social Security payments are the same every month during the year no matter what the stock market is doing. They’re also subject to cost-of-living adjustments (COLA), so after a year of high inflation, your benefit will automatically increase a bit with the COLA.

If you just started taking your benefits and you realize that you may have taken them too early, in some circumstances you can halt your benefits and take them at a later time.⁵ There are some rules to follow, and you’ll need to pay back the benefits you’ve already taken, but it could be an option worth considering.

Important questions to ask include:

• Should I delay my Social Security benefits, or should I take them early?
• If my spouse also gets Social Security, how do we coordinate benefits?
• Will I be able to cover my income needs if I retire before I start claiming benefits?
• Do I know a financial professional who can help me weigh the options for starting Social Security?

RETIREMENT RESCUE #3

Get your own pension (even if you don’t have one now)

Like most Americans, you probably don’t have a pension. But that doesn’t mean that you can’t create your own stream of income that functions like a pension does. Bucketizing your retirement money (Retirement Rescue #1) and making good Social Security choices (Retirement Rescue #2) are two great ways to get started.

In addition, you might qualify for a guaranteed income product, such as an annuity, that will provide cashflow for the rest of your life, if it’s set up correctly.

You might have heard negative reviews of annuities, especially from the previous generation. Over the years, they’ve been streamlined and updated to reflect today’s realities.

But it’s true that guaranteed income investments aren’t right for everyone.They can be complex, and you’ll likely need an annuity professional to help you decide whether you should include one in your retirement plan.

However, by guaranteeing a portion of your income possibly decades from now, you’ll know you will have money coming in for your whole lifetime.

Important questions to ask include:

• How much income can I generate between Social Security and my savings?
• Will I be more confident in my retirement if I know I have reliable income coming my way?
• Is there an annuity product that’s right for me?
• Do I have a financial professional on my crew that can help me decide if a guaranteed income annuity is a good fit for my overall retirement plan?

Your Own Port In The Storm

You’ve been able to save for retirement, but you’re still concerned about making your money last. Costs for essentials like groceries, gas, and clothing go up every year. Recessions and stock market drops are inevitable. Just one bad decision at the wrong time can cause a drop in income for the rest of your retirement.

But you’ve probably noticed that wealthy people seem to be able to make their money last no matter what the stock market is doing. They may not be sharing their secrets with you – but that doesn’t mean you can’t use their financial map for yourself.

The good news is that you can shore up your retirement income and make it more predictable, so monthly expenses are covered. Having the right amount of cash available will alleviate worries and let you enjoy retirement. Also, it’s important to make smart decisions about claiming your Social Security benefits.

Most Americans no longer have pensions but, with the right choices, you can make your own. There are often a lot of moving parts when you’re creating your own monthly pension, so it’s a good idea to reach out to a financial professional for help. Your “rest of your life” income is worth a chat about your options. Wealthy Americans have financial professionals on their crew – why shouldn’t you?