Guaranteed and Non-Guaranteed Income

Guaranteed and Non-Guaranteed Income — Guarantees are Nice but They May Not Be Enough


Guaranteed and Non-Guaranteed Income — Guarantees are Nice but They May Not Be Enough

Paying for retirement used to be a lot simpler. Previous generations counted on Social Security and a guaranteed lifetime pension from their employer. As traditional employer pensions follow the path of the dinosaurs, and the cost of living spirals upward, future retirees may find they have to rely even more on their personal savings to provide the income they need to live comfortably in retirement.

You can roughly categorize your retirement income sources into two types: guaranteed and non-guaranteed. Here’s a quick look at why you may need both types.

Guaranteed income for security

Generally, your Social Security benefits are set for life once you apply. You may get cost of living increases, but basically this is guaranteed and predictable monthly income. A pension, if you’re lucky enough to have one, can also provide guaranteed payments for life, and may include periodic cost of living increases.

Retirees are relying more and more on personal savings to fund their retirement.

If you need additional guaranteed income to meet your basic living expenses beyond Social Security and any pensions, consider annuities. Annuities give you a way to fund your own personal “pension plan” by converting retirement savings into income payments guaranteed by an insurance company. An annuity is a long-term investment that provides tax-deferred the potential for growth. At retirement or later, you have the option to convert those savings into lifetime income payments. A financial professional can help you determine if an annuity is right for you.

Non-guaranteed income for flexibility

Many retirees find that their guaranteed income sources just don’t cover all of their expenses. Regular withdrawals from retirement accounts like 401(k)s or other employer-sponsored plans and Individual Retirement Accounts (IRAs) can help make up the difference.

A retirement withdrawal strategy will factor in an estimate of your lifespan, potential return on your investments, and varying withdrawal amounts so you can project how long your savings may last. Remember, this is the nonguaranteed portion of your income, so you may want to consult a financial professional to help create a sustainable withdrawal plan.

Planning is key

The objective is to ensure that your money doesn’t run out before you do. ING can help you understand how to combine both guaranteed and non-guaranteed income sources so you have the opportunity to experience the best of both worlds: security and flexibility.