Pentegra Retirement Services has created Distribution Path, an online report that outlines the practices that help promote successful retirement outcomes. The focus is on decumulation strategies that can help create a secure retirement income stream.
“The retirement industry has spent the last 20 years advising people how to accumulate retirement savings, points out Richard Rausser, senior vice president of Pentegra Retirement Services, who notes that now it’s time to shift some of the focus to helping educate people on what to do with their savings when they retire. “How will you receive your money? At what age will you retire? How much do you think you need to live? How can you make sure you don’t run out of money and outlive your savings?” he asks.
More than half (56%) of respondents with retirement savings have no distribution plan for accessing and stretching their money once they retire, according to a 2015 survey commissioned by Pentegra Retirement Services. Just one in have given the issue any thought at all.
To address this problem, Distribution Path addresses options to develop and implement a plan that aims to produce a steady retirement income stream.
“It is not only critical to save, but also to figure out your specific wants and needs, and then understand which options are available to you,” Rausser explains, adding that very few people have thought this through, and the results can be dire.
Among other topics, including tax considerations and timing, the Distribution Path discusses some of the pros and cons of annuities. The pros include: guaranteed lifetime income; reduced investment risk; ability to build in inflation increases; ability to provide for a spouse or beneficiary after death.
An annuity’s drawbacks include: no access to additional income beyond periodic annuity amount; and lack of flexibility in changing the joint and survivor beneficiary after election, in many cases.
The report’s simple but necessary tips for creating a decumulation strategy to build a pension-like income stream can make secure retirement a reality, Rausser says.
Pentegra Retirement Services is a provider of retirement plan and fiduciary outsourcing solutions to organizations nationwide.