When the Love is There
No one knows what the future might hold. That is why the diversification of retirement income is so incredibly important. A properly managed investment portfolio is the most critical cornerstone to retirement income, but other sources of income can additionally help you meet your retirement goals. Here are a few types of common retirement income that are often utilized together to create a complete retirement picture.
Fixed Income and Variable Annuities
Following a fixed investment amount, fixed-income annuities offer a certain amount of money for the rest of your life or a prearranged amount of time. Variable annuities, on the other hand, offer payments based on the fluctuations of value of the annuity.
In general, a fixed-income annuity is considered to be a lower risk, more stable investment, while variable annuities may be more volatile but can also potentially pay out more.
Social Security Payments
Individuals can file for Social Security if they qualify — or may request spousal Social Security if their spouse is already collecting payments. Social Security payments can be sizeable depending on the individual and the amount they have paid into Social Security over time. Nevertheless, they should not be relied upon to fund a majority or even a significant amount of an individual’s retirement account, as it is not guaranteed, especially for those who are a long time away from retirement.
Investment Portfolio Withdrawals
Structured withdrawals from an investment portfolio — especially a dividend-heavy portfolio — can be taken while still maintaining the portfolio’s ability to grow. However, it is a balancing act; the more that is withdrawn from the investment portfolio, the less the portfolio will gain. For this reason, many individuals choose only to withdraw from their portfolio the amount that it gains each year, leaving a set amount to continue its growth.
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