Page 17 - 2018 Senior Scene Magazine February
P. 17

Income Anxiety!
How Low Can It Go?
By Jason ValaVanis, CFP®, ChFC (321) 956-7072
In 1990, I began telling my clients that you’re only as rich as your monthly income. For most informed investors, owning a strong lifetime income is superior to owning a large investment that generates little revenue. Dreadfully so, the anxiety of insuf cient income is haunting. Retirees with strong monthly cash  ows are happier, healthier, and understandably less worried. In retirement, it is essential that your “in-come” exceeds your “out-go”.
THAT QUEASY FEELING
Are you feeling a bit uneasy about your future income? If so, read on. It is becoming more and more evident that employer pensions are a thing of the past. Almost no one retiring today (baby boomers) has a pension. If you have a lifetime pension, consider yourself lucky. According to U.S. News and World Report, Social Security made up about 49% of the total income of Americans age 65 and older in 2013 - up from 30% in 1962 - and is the largest of any type of retirement income. Second to that is pensions and third is part time work.
PENSION WHAT?
According to the Employee Bene t Research Institute, a dismal 3% of non-government workers today are covered by an employer pension as opposed to 28% in 1979. Income from savings has shrunk from 25% of
Senior Scene® | February Issue
retirement income in 1962 to 11% in 2013. Basically, Social Security is the dominant source of income for most of America’s retired folks and pensions play less of a role. Because of this shift, seniors are being forced to seek help with their life savings to hopefully  ll the gap. Since 1985, Certi ed Financial Planners (CFPs) have been recommending that seniors withdraw no more than 6% from their savings and investments so that they don’t
risk running out of money. This was the norm for over 2 decades, but not anymore.
TIMES ARE CHANGIN’
Across the Country, most  nancial advisors are recommending that seniors withdraw no more than 3%
of their investments so they don’t go broke. 3% is an awfully low number and most likely was the rate used back during the Great Depression. Many “safe” investments are not yielding more than 1 or 2% per year, which is the underlying reason for the difference. What if you need an extra $1,000 to supplement your income? In that case, you will need to invest another $400,000 if you have it. With the previous 6% target rate, you would only need
an additional $200,000 invested. In the near future,
this dilemma may only get worse. Seniors are the most affected by low rates and volatile economies. The worst thing you can do is sit on excessive cash at the banks! I know it feels good to have that cushion, but it makes absolutely no sense in the long run. Are you feeling the “income anxiety” of 2018? Are your investments keeping up with your income demands? Even worse, are your investments just too risky?
ANXIETY Continued on page 59
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February 2018 | Senior Scene® Magazine | 17


































































































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