Retirees are finding it increasingly challenging to retire and feel certain they will always have a surplus of income in relation to their expenses. Once a person leaves the work force, effectively becoming unemployed for thirty or forty years, the question is how much money is needed in order to retire and keep living the same lifestyle you have been?

Retirement books and websites pump out old cliché’s about how your spending in retirement will be only “seventy percent to eighty percent” of your pre-retirement spending. But when “every day is Saturday,” many retirees are finding they are spending everything and more they once spent!

Very few people want to “stop” living once they retire–they want to start living and doing the things they never had time to do.

Unfortunately, the newly retired will need to do those things on just the money coming into the checkbook monthly from social security, investments, and pensions.

That’s a problem because we are living in an era of the lowest bond interest rates since the Great Depression, and fewer people are retiring with pensions. With the size of the national debt nearing $25 trillion, it would indicate that interest rates will have to stay somewhat low—historically speaking– in order to keep the debt from mushrooming. The message: It will be hard to retire on bonds.

Today’s low interest rates on bonds are making 2018 and 2019 the worst time to retire in history.

In your working years, known as the contribution and accumulation phase, there is only one goal really: …keep socking money away in the 401k, come rain or shine in the market. You aren’t thinking about income, you are thinking about building up at least a half million or a million in retirement assets, hoping to live off the pile– in combination with social security and a pension if you have one.

The retirement books and websites also make the point that you may need two million or three million dollars in order to not be kidding yourself after factoring in inflation and perhaps rising taxes. There is also the specter of social security cutting benefits after 2034—just sixteen years from now—when the trust fund for the nation’s retirement fund will be officially bankrupt.

There will still be FICA taxes supporting the already-retired, but the trust fund supplies twenty three percent of every social security dollar paid out. When that fund is gone, how will the twenty three percent difference be made up? Many conclude that there will be “means testing”—and potentially lower benefits for those who are considered affluent by virtue of actually owning investments and savings.

This idea would likely have voting support as the rich get richer and the voting class is increasingly squeezed: Many Americans have no savings whatsoever, and over 60% of Americans have less than $25,000 in savings to their names.

Therefore, in the future, it may not come down to how much money you HAVE, but rather how much money you HAVE COMING IN, and how reliable that cash flow is. In decades past, treasury and muni bonds paid five to ten percent. Today they pay only two to three percent, meaning you can tie up a million dollars in bonds that will only kick out twenty or thirty thousand dollars a year, not fifty or sixty thousand like the old days!

This is one of the key reasons that so many retiring professionals—like engineers, teachers, doctors, dentists, and business owners—are opting for newer forms of annuities rather than mutual funds or bonds for a major portion of their 401k, 403b, or IRA rollovers. Choosing an annuity for all or part of a 401k or IRA rollover does several things at once:

• Provides instant safety and stability to your life savings
• Puts a floor under your money–you can’t lose principal to the market if you choose the right kind of annuity
• Provides a way to get a return that can be double or triple that of quality bonds
• Adds a “pension dimension” to your financial plan. With the right annuity in retirement, you and your spouse can be guaranteed a lifetime income in the range of five to nine percent for life, depending on your age and deferral period. A $300,000 annuity can kick out $15,000 to $27,000 annually for life, and can cover both spouses even if they live to be 110.

With the proper choice of the right annuity, you can enjoy all of the above and still protect your heirs. The insurance company does not “keep your money” when you die!

Even if you have never thought you would own an annuity, it may be time for you to re-evaluate. Very few investments on the horizon can do all of the things an annuity can do. When you add the word “guaranteed” to the sentence, there is NO other vehicle that can do what an annuity can do.

After seeing two fifty percent crashes during their working years, many retirees are feeling like another crash could be imminent. The market is getting old and one day what goes up, must come down. This is an excellent time to lock in the gains you’ve made up until now, and move a major portion of your money to a true retirement asset that will preserve, protect, and grow your money–while paying you handsomely as long as you live.

Steve J Master Your Money