For many Americans, retiring early is an ambitious but achievable goal. Through budgeting and saving, careful investing, and the help of experienced financial professionals, many people leave the workforce before the traditional mid-60’s age.
If you’ve been fortunate enough to earn a high salary in your career or have significant savings from other sources, you may be able to retire early and still maintain your lifestyle with relative ease. But for most, retiring early will require strategic planning when withdrawing your money from savings and other resources to help ensure you have income in retirement that meets your spending needs. That’s where guaranteed income annuities can play a role.
Income annuities provide guaranteed income that can last a certain number of years or the rest of your life.
Where will you get retirement income?
For most Americans, retirement income will come from multiple sources. Social Security is the retirement income stream most people are familiar with. But income may also come from accumulated savings and other traditional retirement accounts, such as 401(k)s, IRAs and pensions. For early retirees, this can create some issues:
- Many retirement savings products may penalize you for taking withdrawals before you reach a certain age.
- Social Security benefits don’t begin until age 62, and the longer you wait to start collecting your benefits, the more you’ll receive.
- With personal savings, you may not know how much you can withdraw each year without depeleteing your savings too soon.
How guaranteed income annuities can help
Income annuities can be a valuable part of a retirement strategy because they provide guaranteed income that can last a certain number of years or the rest of your life (if a lifetime payout option is selected). In an early retirement scenario, you could use a portion of your savings to purchase an income annuity that is immediately converted into regularly scheduled income payments that can help you:
- Supplement withdrawals from your savings.
- Delay taking Social Security until your benefits payments are maximized.
- Avoid taking early withdrawals from retirement accounts that will penalize you for doing so.
Certain income annuities can also be set to increase annually to help keep pace with inflation. Talk to your financial professional to learn if income annuities should be part of your retirement plan.