Step 1 - Determine Your Cost of Retirement

Achieving your retirement objectives will not happen automatically. The first step to consider as retirement approaches is to determine your cost of retirement. Your cost of retirement will be affected by many factors. Three of the most significant are:

• Your monthly retirement living expenses - A common rule of thumb is somewhere between 70% and 100% of your annual earned income prior to retirement.
• Your retirement age - This is the age at which you plan to stop working full time and start accessing your retirement portfolio assets.
• Your life expectancy - This will define how many years your retirement costs will continue to be incurred.

Step 2 - Apply Your Income Sources

Once your cost of retirement assumptions have been defined, you can start to look at the income sources that may be available to you in retirement to help offset your retirement costs. Income sources may include among other things:

• Social Security
• Pensions
• Immediate annuity payments

Step 3 - Withdraw from Your Portfolio Assets

Once your available income sources have been applied to your cost of retirement, you can take withdrawals against your portfolio assets to make up the difference. Portfolio assets commonly include:

• Brokerage accounts
• Money Market accounts
• 401(k)s, 403(b)s, and other employer-sponsored retirement accounts
• IRAs
• Fixed Annuities

Step 4 - If Necessary, Consider Changes

If you determine that you are not on track to achieve your retirement objectives, you will need to consider making some changes. These changes may include:

• Saving more before you retire
• Redefining your retirement age
• Considering part time employment during retirement
• Spending less during retirement
• Combination of above

Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.

Source: WealthVision

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