Is Your Retirement Income Still Enough?

 

By Jon Flynn

 

Many people retire with what at the time seems like “enough” savings.  They add up what they will be receiving from social security and supplemental income sources like interest on savings and investments and think, “ That should be enough….”.  Then another decade of time sails by and what once seemed like ”enough”, doesn’t cut it any longer. 

 

At the root of the problem is something that many people who have been retired for some time often struggle with – inflation.  Over time the “I” word influences our cost of living and we notice our expenses going up.  So as the years go by we end up spending more on things like groceries, fuel, taxes, repairs, clothing, almost everything it seems.  Throughout our working years we take these increases in stride because our paychecks tend to move higher as well.  However, in our retirement years we tend to feel the effects of inflation a whole lot more.  Why?  Because like anyone on a fixed income will tell you, when prices go up but your income doesn’t, it makes it harder to stay afloat. 

 

Here are a couple ideas that in combination or on their own may right the ship.

 

Immediate Annuities.   Using a portion of your savings to purchase an Immediate Annuity can be a good idea.  I’m not the biggest fan of many of the types of annuities that insurance companies promote but I do find that this type of an annuity can work really well for older seniors.  Immediate Annuities are a contract with an insurance company.  In exchange for giving the insurance company a lump sum they promise to pay you a fixed amount of annual income for life or a for a specific term. The insurance company must meet this obligation even if you break the record for longest living person in history.  Because principal may not be returned when the term you agreed upon ends payments can be higher than you’d get from investments that return only interest. 

 

Reverse Mortgages.  Reverse Mortgages are becoming quite popular in America.  Essentially a loan in reverse, they can be a terrific solution for many retirees. They can allow retirees over age 62 the ability to generate a substantial amount of tax-advantaged income by tapping into one of their largest assets – the equity in their home.   You can receive free information about Reverse Mortgages by calling AARP at: 800-209-8085.

 

Downsizing.  It’s not uncommon to feel attached to your home.  However, if you’re willing to move to a less expensive home, many benefits can be realized.  Perhaps the kids are gone now and a big home is no longer required.  With a smaller home you may spend less on things like utilities, taxes, and maintenance.   In addition, you might also gain some non-financial benefits as well.  Smaller homes can be easier to take care and to get around in.

 

Everybody situation is different and arriving at solutions can get complicated.  So always consult with financial, legal, and tax professionals before making any decisions.

 

 

Jon Flynn is a Certified Financial Planner ^TM and owner of Flynn Financial in Eynon. He is a Representative of Securities America, Inc., Member FINRA/SIPC and of Securities America Advisors, Inc. Flynn Financial and Securities America are unaffiliated.   Mr. Flynn can be reached at 570-876-5015.