Outliving Your Money

**Financial Oversight: Dependence on Projected Growth for Current or Future Income Needs**

**Risk of Outliving Your Savings**

Among the primary concerns voiced by retirees is the fear of outliving their savings. While most retirees can count on Social Security benefits and potentially a pension, many must rely on their retirement savings to create a supplementary income source for monthly expenditures. The critical challenge for those looking to enhance their income from their savings is determining a sustainable withdrawal rate that will last throughout their retirement. Variables such as market risk and withdrawal strategies are essential considerations that influence the likelihood of depleting funds. Is it prudent to base your future income solely on speculative growth, or might guaranteed income products offer a more secure alternative?

For those approaching retirement, it is crucial to consider, “What happens if projections for retirement savings fail to meet expectations?” The total value of your assets at the onset of retirement plays a significant role in identifying a feasible income level that maintains financial stability over time. Planning without guarantees means you can only estimate potential outcomes based on available data.

For retirees already navigating this stage, the pertinent question becomes, “What is the reasonable annual withdrawal amount from your savings that will effectively supplement your income throughout retirement, while minimizing the risk of running out of funds?”

Historically, many financial advisors have promoted the 4% withdrawal rule as a foundational strategy when beginning retirement. For example, a retiree with a $300,000 portfolio would typically commence withdrawals at $12,000 annually, with incremental increases each year. However, the persistent low-interest rate landscape, fluctuations in market stability, and increased life expectancies have prompted a reevaluation of this strategy. Recent insights suggest that the traditional 4% rule may pose greater risks to retirees than previously acknowledged.

A Wall Street Journal article from March 13, 2013, titled “Say Goodbye to the 4% Rule,” underscores this concern:

“If you had retired on January 1, 2000, with an initial 4% withdrawal and a portfolio consisting of 55% stocks and 45% bonds, rebalanced monthly, and with annual increases of 3% for inflation, your portfolio would have diminished by a third through 2010. You would have only a 29% probability of sustaining that withdrawal rate for three decades, as estimated by T. Rowe Price Group.” This situation is even more alarming considering interest rates are significantly lower now than they were in 2000.

Given the availability of guaranteed income growth and the potential for increased withdrawals in certain fixed indexed annuities (refer to Guaranteed Growth & Lifetime Withdrawal Basics), why would you risk your vital retirement income on uncertain projections?

Would you like your current or future retirement income streams to be assured?

We invite you to schedule a complimentary, no-obligation financial review with a Future Benefits Agent by clicking here.

Alternatively, you can reach us at 901-754-2040.

* Please note, we do not operate as stock brokers or financial advisors and do not provide investment advice. Additionally, we are not tax advisors and do not offer tax advice.

For more information, please refer to our Professional Disclaimer.