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Making Retirement Less Complicated

The following is a sponsored post provided by Blueprint Income.

Planning for retirement is challenging. It’s the most complicated time in our lives, financially. When you’re young, all you really need to do is save. But, eventually saving won’t be enough. You have to start figuring out how you’ll actually survive in retirement. And it’s not the same as surviving today for 3 big reasons, which I’ll go through below. Then I’ll tell you about a company I recently discovered that is trying to make retirement less complicated.

Reason 1: You won’t have a steady source of income.

While we’re working, the financial calculus is pretty simple: spend less than you make. Many of us have steady sources of income that dictate our spending ability. We know that each month we’ll get $X dollars, and we spend some amount less than $X so that we don’t go into debt and we save.

But in retirement, unless you’re one of the lucky ones who have a pension, you won’t have a steady source of income. We do have Social Security, which helps a lot, but it only covers 40% of the average retiree’s spending. So the remaining 60% of our spending we’ll have to cover through interest, withdraws from our savings accounts, or finding some other way to generate income. Most of our options out there aren’t as stable as our salaries, so we might not have the security of steady income.

Reason 2: You don’t know how long retirement will last.

There’s a reason why you can’t get a great answer to the question of how much you need to save for retirement. There are so many variables that impact that number, including what happens in the stock/bond markets and how long you live. You might have a retirement that lasts 10 years, or perhaps it’ll last 30 years. A 30-year retirement is wildly more expensive than a 10-year retirement. So which do you prepare for?

This also isn’t as much of a challenge if you have a pension, because a pension provides income no matter how long you live. But if you’re heading into retirement with a finite amount of assets, you need to figure out how much to spend monthly so that you don’t run out, no matter how long you live.

Reason 3: You might not have the same cognitive ability to deal with your finances.

Sometimes we procrastinate — it’s normal! And, often it’s not a huge deal; we’re able to catch up. But only because we’ll have the same level of intelligence and reasoning to get us back on track. Unfortunately, we can’t count on this in retirement. Some of us will start to lose our cognitive abilities. And, if we’ve set our future selves up with the responsibility of making complicated financial decisions (like the one outlined in reason 2), we might not do well.

Again, if we had pensions with paychecks coming in the door every month, then this wouldn’t be as much of a problem. But since most of us will be managing a market portfolio to an unknown end date, there will be no autopilot.

The Blueprint Income Solution

I was recently introduced to Blueprint Income, who are trying to do something about this. They’ve recognized the challenges listed above and created a new type of retirement plan to deal with it. It’s called the Personal Pension. Using annuities (insurance products that provide guaranteed income in retirement), they’re able to help you design your own pension-like plan if you don’t have one from your employer.

You contribute to it on an ongoing basis, alongside your 401(k). But, instead of that money going to buy stocks and bonds, it turns into steady retirement income that continues for as long as you’re alive, and even if the stock market crashes.

The annuity market is known for being complicated, hard to navigate, and expensive, so they’re dealing with that as well. Their platform only includes the simplest, fully-guaranteed, low-cost annuities, not the more complicated variable and indexed annuities that have a bad rap. And, their plans start at $5,000 with the ability to contribute flexibly over time if desired, much lower than the rest of the market.

Learn more about Blueprint Income and the Personal Pension here.

All of this isn’t to say that retirement is necessarily going to be hard or complicated for you. In fact, it has the potential to be exactly the opposite. But, creating a financially secure retirement for yourself — where you don’t have to stress about money — takes hard work and planning ahead. I hope the resources on this site and companies like Blueprint Income help make it easier for all of you.

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