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. Most people live in one of two key stages: the Accumulation Stage or the Distribution Stage.
Stage 1: Accumulation
The Accumulation Stage is the “saving” phase of your financial life. During this time, you’ll often focus on saving enough money for retirement.
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 Workbook
Work through these three exercises to test your retirement plan.
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. Some specific goals are familiar 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 other goals that are important to you.
Goal 1: Protect Against Risks
Protect yourself from the unexpected by setting up emergency funds and purchasing a good 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 living standard 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 calculating how much money they will need for a comfortable retirement.
However, estimating retirement expenses can help you make crutial 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 costs. - After a decade or so, expenses begin to exceed monthly income.
- On average, 20% of retiree income is 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 full retirement age. However, the amount of your Social Security benefit
will go up the older you are when you begin taking it. Calculate your
Social Security benefits here (click). - Pensions
A traditional defined benefit plan is a pension. The payout to the worker is based on a prescribed 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 the type, an annuity represents a contract between a buyer and an insurance company. The insurance company agrees to provide regular income payments over a specified period in exchange for the premiums the buyer pays to purchase an annuity contract. 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 offering several indexed interest-crediting strategies designed 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 with the following:
- 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.