Retirement Road Map

Retirement Road Map

Are YOU living in the Accumulation Stage, Distribution Stage, or somewhere in between?

Like other aspects of your life, your financial life tends to progress through certain phases or stages. In fact, most people find themselves living in one of two key stages: Accumulation Stage or the Distribution Stage.

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Stage 1: Accumulation

The Accumulation Stage can be thought of as the “saving” phase of your financial life. During this time, you’ll often focus on saving enough money for retirement.

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Stage 2: Distribution

During retirement, it’s likely you’ll transition to the Distribution Stage. In some ways, you could call this the “spending” phase of your financial life, or a time to determine how much money you can safely withdraw from your assets to meet your retirement goals.

Expectations for Retirement

The purpose of this workbook is to help you think about your expectations for retirement.

These three simple exercises can help you.

DEFINE

your retirement goals and lifestyle expectations

ESTIMATE

your retirement expenses

INVENTORY

your sources of guaranteed retirement income

Exercise 1

DEFINE

your retirement goals and lifestyle expectations

At this stage of your life, what are your goals?
Most people set individualized financial goals during the Accumulation Stage and Distribution Stage of their financial lives. Yet, there are certain goals that are common to most people throughout the financial life cycle.

What are your goals in each of these five categories?
Check each box that applies to you. Fill in the blanks with additional goals that are important to you.

Goal 1: Protect Against Risks

Protect yourself from the unexpected by setting up emergency funds and purchasing an adequate mix of insurance to cover life, disability, health, property and casualty, and vehicles.

Right now I would like to...

  • Create an emergency fund
  • Add more money to my emergency fund
  • Re-evaluate my life insurance needs
  • Plan ahead for the possibility of needing long-term care

Goal 2: Ensure Financial Security

Provide for yourself and your family (education, home, cars, and other needs) without placing undue stress on your resources or causing a financial crisis.

For me, it's important to...

  • Care for an aging family member
  • Support an adult child
  • Pay college expenses
  • Pay off my current home
  • Purchase a new home
  • Downsize
  • Move to _____________
  • Plan ahead to meet routine monthly expenses

Goal 3: Develop a Comfortable Standard of Living

Go beyond the basics of ensuring financial security to obtain some of the added benefits of life such as a vacation, club memberships, entertainment, relaxation, and time away from work to pursue other interests.

I would like to...

  • Travel in the United States
  • Travel abroad
  • Travel to ____________
  • Join _________
  • Purchase an additional home
  • Purchase a motor home
  • Buy another car
  • Begin a new career
  • Attend college
  • Pursue my interest in _________

Goal 4: Create a Comfortable Retirement

Create a financially independent, comfortable retirement that can provide a standard of living that’s consistent with what you enjoyed during your working years.

I think it would be helpful to...

  • Define my lifestyle expectations in retirement
  • Estimate retirement expenses
  • Create a retirement income plan
  • Determine an effective income withdrawal rate
  • Evaluate retirement income sources
  • Select a target retirement age

Goal 5: Manage Your Estate

Make an orderly transition and distribution of your assets and overall wealth. Please consult with a tax professional and/or attorney to discuss your goals in this category.

For me, it's important to...

  • Inventory my assets
  • Update my will
  • Update my estate plan
  • Explore charitable giving options
  • Write a will
  • Create an estate plan
  • Evaluate my beneficiary designations

Exercise 2

Estimate

your retirement expenses

Many people have not estimated the amount of income they’ll need to cover retirement expenses.
According to the 2021 Retirement Confidence Survey®, only half of workers (50%) have tried to calculate how much money they will need for a comfortable retirement.
However, estimating retirement expenses can help you make important decisions.
The same 2021 report revealed that when individuals calculated a goal, 44% changed their retirement plans and 59% started saving more.

Quick Facts About Retirement Expenses

  •  You’ll need approximately 80-90% of your pre-retirement income
    to cover expenses.
  • At the beginning of retirement, most people’s monthly income will exceed
    their expenses.
  • After a decade or so, expenses begin to exceed monthly income.
  • On average, 20% of retiree income will be spent on health care.

Source: U.S. Department of Labor, “Taking the Mystery out of Retirement Planning,” 2010.

Exercise 3

Inventory

your sources of guaranteed retirement income

Quick Facts About Guaranteed Retirement Income

  • Social Security Benefits
    Nearly 75% of Americans apply for Social Security benefits before they
    reach full retirement age. However, the amount of your Social Security benefit
    will go up the older you are when you begin taking it. To calculate your
    Social Security benefits, go to www.ssa.gov/retire/estimator.html.
  • Pensions
    A traditional defined benefit plan is a pension. The payout to the worker is based
    on a defined formula upon retirement, either a percentage of earnings or a fixed
    dollar amount per month. In 1985, 89% of the Fortune 100 offered a traditional
    defined benefit plan to new employees, compared with just 28% in 2007.
  • Annuities
    There are different kinds of annuities. No matter what the type, an annuity
    represents a contract between a buyer and an insurance company. In exchange
    for the premiums the buyer pays to purchase an annuity contract, the insurance
    company agrees to provide regular income payments over a specified period
    of time. An annuity contract may include other benefits such as a tax deferral,
    growth potential, living benefits, and death benefits. These benefits may vary
    from annuity to annuity; each offers a different method for calculating interest
    and creating future value.

 

What are your sources of guaranteed retirement income?

In addition to estimating your retirement expenses, it’s also important to inventory your anticipated guaranteed retirement income. Common sources include Social Security benefits, pensions, and annuities.

Use this worksheet to inventory the amount of income you expect to receive on a regular basis throughout retirement.

How does your amount of guaranteed income compare to your estimated retirement expenses?

One of your choices for guaranteed retirement income is a fixed indexed annuity.

Today, you have many choices for saving money for retirement.

One of your choices for guaranteed retirement income is a Fixed Indexed Annuity. A fixed indexed annuity is a tax-deferred insurance product that offers several indexed interest-crediting strategies designed specifically to help you meet your long-term retirement income needs.

When included as part of your overall retirement plan, a fixed indexed annuity can provide you:

  • The potential to earn interest credits based on changes in external market indices
  • Tax-deferred interest accumulation
  • A death benefit for your beneficiaries’ principal protection
  • The ability to create an income stream you can never outlive
  • The security of a minimum guaranteed contract value
  • Options for when you decide to withdraw some or all of your money

Is a Fixed Indexed Annuity right for you?

Working with your representative can help you determine if a Fixed Indexed Annuity is right for
you—whether you’re living in the Accumulation Stage, Distribution Stage, or somewhere in between.