Some retirees underspend throughout their golden years, sacrificing quality of life to assure they don’t outlive their income. Others resist their desire to be philanthropic because of concerns that donations could leave them short on money down the road.
A market downturn during the early years of retirement can be one of the biggest risks of running out of money. This may seem incongruous, since the earlier a downturn happens, the more time a portfolio has to recover. However, early loss of principal combined with steady withdrawals can lead to a challenging financial situation.
One common form of financial stability used to come in through a company pension plan. When combined with Social Security benefits, pensions gave retirees an idea of how much they could spend each month for the rest of their life.
Social Security is expected to be in good shape for the next 15+ years, but pensions are quickly becoming a thing of the past. If you don’t have or expect a pension when you retire, consider learning how you can create a steady and reliable income stream using an annuity from an insurance company. Annuities can help enhance quality of life throughout retirement by providing a similar sense of financial confidence that pensions once offered.
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