Income

Determining income needs is the critical factor in successful retirement planning . Reaching a desired amount of savings is useful, but translating that lump sum of savings into an income stream that lasts for many years is the most important financial planning challenge that retirees face. "“When it comes to retirement planning, Americans need to look beyond the ‘number,’” said Fishbein. “We all know what the number is: That magic dollar figure that, when reached, means you’re set in...

"Unlike traditional pensions, which provide participants with a steady stream of income for as long as they live, 401(k) plans generally pay out benefits as lump sums. Lump-sum payments mean that retirees have to decide how much to withdraw each year. That's really hard to do, because people don't know how long they are going to live. If they live longer than expected, they face the horrible prospect of running out of money in old age...The way to have the highest standard of living in...

The financial crisis has resulted in renewed interest in immediate annuities which can be used to lock-in stable, guaranteed income for a lifetime. "An immediate annuity can function just like a pension , producing a predictable payout. As the "immediate' part of the name suggests, the distributions start shortly after the money is invested." Longevity risk , inflation protection, how much to annuitize , and adding annuities over time are addressed in this article. Source: Wall Street Journal...

Traditional asset allocation and many target date mutual funds have not served retirees and near-retirees well during the financial crisis. Many in the asset management community are realizing that diversification and asset allocation are not sufficient. Largely in response to the crisis, several companies are rolling-out new products that combine traditional asset management and insurance . These "hybrid" products use insurance to create a base income that is guaranteed for life and is not...