Broker Check

What is Your Retirement Income Strategy?

September 22, 2020

Do you have a retirement nest egg and wondering how best to convert it into an income stream?

There are several strategies for producing spendable income from your retirement savings, and each has its pros and cons.

Certificates of Deposit. Yes, the principal is safe, but today you’ll receive very little income and may not keep pace with inflation. During periods when rates are high, you may experience a cut in your income when a CD matures and is reinvested when rates are lower.

Laddered Bonds. Bonds, like CDs, have a maturity date. You may buy several bonds that mature at various times in the future for when you’ll likely need the money. Bonds pay you a scheduled dividend, but while the interest is typically higher than a CD, it also may not keep pace with inflation.

Dividends from Stocks. Some stocks have a history of increasing dividends periodically, giving you pay raises to keep up with any inflation. Historically, your capital may grow over time – but your principal will fluctuate with movements in the stock price and companies can reduce or even stop paying dividends when times are tough.

Systematic Withdrawals from Mutual Funds. This can provide a specific monthly withdrawal to meet your income needs. You may also be able to increase withdrawals to keep up with inflation – if the account is growing over time. However, the value will fluctuate with the stock and bond markets and you may need to reduce your withdrawals during periods of decline.

Immediate Annuities. Much like a pension, here you’re essentially turning a lump sum of money into an income stream through a contract with an insurance company. You can receive guaranteed income for life, even for a couple, no matter how long you live. The downside is, for the highest payout you’ll have no more access to your money for emergencies and no inheritance for your beneficiaries.

Variable Annuities with a Guaranteed Income Benefit. This is also through an insurance company, but within the annuity are a selection of subaccounts. The investments provide the potential for growth in your account, but there is a guaranteed lifetime income provided in the event the investments perform poorly. Also, you still have access to your account and an amount to pass to your beneficiaries. These annuities may have higher fees than other choices.

The Income for Life Model®. This is a time-segmented approach to retirement income planning using multiple investment products. A planning process determines how much to put in various conservative investments for income during the early years, and how much to put in various growth-oriented investments for potentially rising income during later years and/or for leaving a legacy. For a short video and more information, please visit



Securities and insurance products are not insured by any federal agency and are subject to investment risks, including possible loss of principal invested.

CD's are FDIC insured up to $250,000, retirement accounts up to $250,000, and offer a fixed rate of return.  CDs are intended to be held until maturity, as this assures redemption at par value. Investors may sell them before the stated maturity date, if needed, at prevailing market prices, and proceeds may be more or less than the original investment. Sales charges may apply.

Bonds are considered fixed income securities and if sold or redeemed prior to maturity may be subject to a additional gain or loss.

Dividend yield investing may not be suitable for all investors. You should never invest solely on the basis of dividends. Higher dividends are not indicative of the quality of an investment. Additionally, higher dividends will result in lower retained earnings. As dividend yields may not be sustainable, income investors must be sure to analyze an investment carefully and their ability to sustain market fluctuations. Investments paying dividends do not carry lower risk. Dividend payments are not guaranteed by the issuing entity. The issuer can discontinue the dividend at any time. Dividend payments reduce the price of the security by the amount of the paid dividend.

Mutual funds are sold by prospectus only. Investors should consider objectives, risks, charges and expenses of the fund carefully before investing. The fund prospectus contains this and other important information. Investors should read the prospectus carefully before investing. For a copy of the prospectus contact your financial advisor.

Annuities are long-term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Withdrawals will reduce the living benefits, death benefits and account values. Early withdrawals may be subject to withdrawal charges. An investment in the securities underlying a variable annuity involves investment risk, including possible loss of principal. The contract, when redeemed, may be worth more or less than the original investment. The purchase of a variable annuity is not required for, and is not a term of, the provision of any banking service or activity. Guarantees are backed by the claims-paying ability of the issuer. Variable annuities are sold by prospectus only. Investors should carefully consider objectives, risks, charges and expenses carefully before investing. The contract prospectus and the underlying fund prospectus contain this and other important information. Investors should read the prospectus carefully before investing. For a copy of the prospectus contact your financial advisor. This optional rider has limitations and comes at an additional cost through the purchase of a variable annuity contract. Guarantees are based on the claims paying ability of the issuing company.