1. Plan for four key factors when investing; think L.I.V.E. your way

Check what applies to your situation:

Longevity fact—There’s a 50% chance at least one spouse of a 65-year-old couple will live to age 95.

Don’t have a pension, or it only covers one person; concerned about reduced income with loss of a spouse

Worried about running out of money if I live a long life

Inflation fact—Just 3% annual inflation reduces purchasing power by 30% over 10 years.

Want investments that have the potential to keep up with rising costs (inflation)

Concerned about taking on more investment risk to keep up with inflation

Volatility fact—In the last 75 years, there’s been six bear markets with an average 30% drop.

Concerned that volatile markets will affect when I can retire

Concerned that volatile markets may deplete my savings and I may have to go back to work

Emotions fact—The average investor underperforms the market by 5.88% due to their behavior. Four in 10 preretirees are concerned about running out of money in retirement.

Would likely get out of the market if my investments dropped significantly

Don’t want to worry about having enough—stable lifetime income in retirement is important to me

2. Identify your “M.U.S.T.-haves” (expenses in retirement)

Calculate monthly M.U.S.T.-have expenses:

Mortgage/rent/real estate taxes

Medical/Medicare

Utilities (gas, water, electric, cable)

Shopping (food, pharmacy, personal)

Transportation (car payment, insurance, gas, maintenance)

Other (things that you do regularly such as hobbies, vacations, working out, golf, etc.)

Total monthly M.U.S.T.-have expenses

Multiplied by 12 for total estimated annual expenses

(Yearly income need)

Guaranteed monthly income:

Social Security

Pension

Other guaranteed income

Total monthly income

Multiplied by 12 for total estimated annual income
(Yearly income)

Do you have a yearly M.U.S.T.-have income gap?

Total estimated annual expenses (Yearly income need)

Total estimated annual income (Yearly income)

Yearly income gap

Total estimated annual expenses (Yearly income need)

Total estimated annual income (Yearly income)

Yearly income gap

If you have a yearly income gap, consider an annuity as a “pension alternative” to cover it.

• Lifetime income for you and your spouse that can increase—but not decrease.

3. Determine guaranteed income needed in retirement

Calculate what you’ll need to cover your yearly M.U.S.T.-have income gap in retirement. Here’s how much to consider investing if you:

Want INCOME NOW—two options

1. Non-guaranteed income (withdrawals from investment, savings, or retirement accounts)

Yearly income gap

Safe Withdrawal Rate: typical industry recommendation 3.00% or 4.00%)

Amount needed to fund yearly NON-GUARANTEED income

Yearly income gap

Safe Withdrawal Rate: typical industry recommendation 3.00% or 4.00%)

Amount needed to fund yearly NON-GUARANTEED income

2. Guaranteed lifetime income from an annuity—pension alternative

Yearly income gap

Guaranteed Withdrawal Rate (ex. 5.00%)

Amount needed to fund yearly GUARANTEED income

Yearly income gap

Guaranteed Withdrawal Rate (ex. 5.00%)

Amount needed to fund yearly GUARANTEED income

Want GUARANTEED INCOME LATER

(If you have more years until retirement, you can invest less.)

÷ (

Number of years until first withdrawal

X

7.50% growth rate (Simple Interest)

+ 1 )

+ 1 ) = $