In the past, retirement planning in the United States was a little easier. For instance, the average life expectancy in 1950 was 68 years old.¹ So if you retired at age 62, your retirement plan might need only six years of retirement income. 

Whereas the current life expectancy for the U.S. in 2022 is 79.05 years². That’s an additional eleven years of retirement income to plan for! 

At Compass Retirement, we’ve noticed that since more people are responsible for deciding how much income to set aside for retirement and how to invest that money, they are falling short compared to the days of employer-sponsored retirement income and shorter life expectancies. 

In fact, recent studies show that today’s retired baby boomer households without a pension are more likely to deplete their 401(k) savings quickly, which means they are more likely to outlive their savings.³ 

This is why it’s important to look beyond your company-sponsored retirement plan. You can create a mix of tax-advantaged IRAs, a taxable investment portfolio, guaranteed annuity income, life insurance products that build cash value, and even passive income from a work endeavor (royalties, residual income) or rental property. Early in your retirement planning, we can help you consider different options. 

Showing how important it is to diversify your income sources, the Center for Retirement Research at Boston College found that retirees who receive a higher portion of their income from annuities spend down their savings at a slower rate. Note that for the purposes of this study, annuity income refers to a pension, Social Security or an insurance company annuity.⁴ 

In addition to annuity options, investors may want to consider building a laddered bond portfolio and/or laddered certificates of deposit.⁵ While this plan locks up money for periods of time, it provides the opportunity to augment funds at different stages of retirement and can help you from running out of money. An income stream can be generated by interest and dividends from an investment portfolio comprised of bonds, bond funds, CDs and dividend-paying stocks. This strategy can help minimize your risk to principal but does increase your risk exposure to inflation and changing interest rates.⁶ 

While Social Security is basically a lifetime annuity, many people have no idea how much payout to expect, especially if they are early in their retirement planning effort. One tool that anyone can use at any age is to register online at my Social Security. You can monitor your personalized retirement benefit estimates and spousal benefit estimates, which change as you move through your career.⁷ 

Gone are the days of collecting Social Security, a pension, sitting on the porch and your money lasting long enough to take care of you. Retirement today is a not a guessing game… it requires an active engagement of a vision for what you want, proper strategies to get you there, and an experienced partner to help guide you along the way.

Content prepared by Kara Stefan Communication and Scott Winstead. 

1,2 Macrotrends. 2022. “U.S. Life Expectancy 1950-
2022.” https://www.macrotrends.net/countries/USA/united-states/life-expectancy. Accessed March 3, 

2022. 

3,4 Center for Retirement Research at Boston College. Feb. 24, 2022. “Retirees with Pensions Slower to Spend 401k.” https://squaredawayblog.bc.edu/squared-away/retirees-with-pensions-slower-to- 

spend-401k/. Accessed March 3, 2022. 

5 Lisa Smith. Investopedia. Sept. 28, 2021. “4 Sources of Income for Your
Retirement.” https://www.investopedia.com/articles/retirement/08/retirement-income-stream.asp. 

Accessed March 3, 2022. 

6 Fidelity. 2022. “Retirement income strategies.” https://www.fidelity.com/learning-center/personal- finance/retirement/retirement-income-strategies. Accessed March 3, 2022. 

7 Social Security Administration. 2022. “Create your personal my Social Security account today.” https://www.ssa.gov/myaccount/. Accessed March 3, 2022. 

Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional for guidance before making any purchasing decisions. Compass Retirement is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Compass Retirement are not affiliated companies. 

1288804 – 04/22. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.