Strategic Retirement Income Planning Services (2024)

FAQs

What is the most popular retirement income plan? ›

Three of the most popular options are a solo 401(k), a SIMPLE IRA and a SEP IRA, and these offer a number of benefits to participants: Higher contribution limits: Plans such as the solo 401(k) and SEP IRA give participants much higher contribution limits than a typical 401(k) plan.

Financial planners typically focus on helping you accumulate and invest your money during your high-earning years. Retirement planners have additional training to help you figure out how to use this money to generate reliable cash flow in retirement.

The Supplemental Retirement Plan (SRP) is a non-qualified retirement plan under the Internal Revenue Code, the SRP enables you to set aside additional compensation and bonus earnings on a tax-deferred (before-tax) basis—beyond what's possible in the 401(k) Plan.

The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

According to the $1,000 per month rule, retirees can receive $1,000 per month if they withdraw 5% annually for every $240,000 they have set aside. For example, if you aim to take out $2,000 per month, you'll need to set aside $480,000. For $3,000 per month, you would need to save $720,000, and so on.

However, a popular approach is to invest in stocks and other growth assets while saving up, then convert your portfolio into an annuity upon retirement. With $400,000, if you buy an annuity at age 62 and then retire, you might expect monthly payments of around $2,400 for the rest of your life.

For example, if you have short-term issues or need assistance with specific questions or investments, a financial advisor can usually be a big help. However, if you want support for developing a comprehensive long-term plan for your finances, you may be better off working with a financial planner.

Some advisors recommend saving 12 times your annual salary. 12 A 66-year-old $100,000-per-year earner would need $1.2 million at retirement under this rule. But, as the former examples suggest and given that the future is unknowable, there's no perfect retirement savings percentage or target number.

If you're looking for help building a retirement nest egg, you most likely want a certified financial planner (CFP) with expertise in retirement planning. Other financial advisors who may specialize in retirement planning can be identified by various credentials following their names.

FERS is a retirement plan that provides benefits from three different sources: a Basic Benefit Plan, Social Security and the Thrift Savings Plan (TSP).

What is a fiduciary retirement plan? ›

Under the Employee Retirement Income Security Act (ERISA), a person is a 401(k) plan fiduciary "to the extent that he exercises discretionary control or authority over plan management or authority or control over management or disposition of plan assets, renders investment advice regarding plan assets for a fee, or has ...

The Employee Retirement Income Security Act (ERISA) covers two types of retirement plans: defined benefit plans and defined contribution plans. A defined benefit plan promises a specified monthly benefit at retirement.

Average Monthly Retirement Income

According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

Safe Withdrawal Rate

Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.

Retiring with $500,000 could sustain you for about 30 years if you follow the 4% withdrawal rule, which allows you to use approximately $20,000 per year. However, retiring at a younger age will likely reduce the amount you receive from Social Security benefits.

Social Security

“Additionally, a nonworking spouse can still qualify for half that amount at their full retirement age.” Over two-thirds of retired Americans depend on Social Security as their primary retirement income source.

A 401(k) Plan is a defined contribution plan that is a cash or deferred arrangement. Employees can elect to defer receiving a portion of their salary which is instead contributed on their behalf, before taxes, to the 401(k) plan.

The Bottom Line. In a 401(k) vs. Roth IRA matchup, a Roth IRA can be a better choice than a 401(k) retirement plan, as it typically offers more investment options and greater tax benefits. It may be especially useful if you think you'll be in a higher tax bracket later on.