5 Things You Can Do Now to Guarantee Income in Retirement

If you’re already in your golden years and you’ve put your 9-5 working days behind you, then it’s time to start thinking seriously about ensuring that you have a steady stream of income for the rest of your life.

Here are 5 things you can do now to guarantee retirement income.

1. Buy an Immediate Annuity

If you’re not familiar with the concept of an annuity, it works this way: you pay a company a lump sum of money and, in return, that company guarantees to pay you a certain amount of money every year for a specified period of time or for the rest of your life.

There are different flavors of immediate annuities, and the type you should select depends on your financial goals. For example, do you want a lower annual payout for income that would rise with the inflation rate? Or, would you prefer a fixed amount that stays the same no matter how much inflation increases? How you answer questions like that will determine the type of immediate annuity you want to purchase.

Many people consider immediate annuities to be an important part of retirement planning.

2. Use Variable Annuity Withdrawal Benefit Riders

One pro-tip to get some guaranteed income is to buy an annuity that has a lifetime withdrawal benefit (LWB) or guaranteed minimum withdrawal benefit rider (GMWB).

That works like this: you deposit your funds immediately and the annuity company captures your account value each year, noting the highest value as your “income base.” When you’re ready to activate the rider, you can use either the current value or the income base value for your withdrawal.

This is an especially good option if you opted for early retirement.

3. Use Social Security

The federal government guarantees income for you in your sunset years. It’s called Social Security.

Although you’ve been paying into Social Security throughout your working years, you’ll probably still get more money out of it than you put in. In other words, it’s free money, so take it.

Another great benefit of Social Security is that it offers a cost-of-living adjustment. That means the income will increase with the inflation rate.

4. Buy Longevity Insurance

Longevity insurance is similar to an immediate annuity except, as the name implies, it’s geared more towards people who live a long life.

Basically, it’s an annuity that’s deferred until you reach a certain age, such as 90. If you buy longevity insurance, you’ll have some peace of mind knowing that you won’t outlive your assets.

5. Buy Bonds

Government bonds offer an excellent, reliable source of income in the form of interest payments. Note that it’s a good idea to “ladder” your bond investments by purchasing bonds that mature in different years going forward. That way, your income will continue for several years.

You’ve worked hard to save for your retirement. Now, it’s time to enjoy life and worry less about money. Make sure that you take steps to provide for yourself even though you aren’t formally “working” any more.