1 Money Factor That Appears To Lead to a Happier Retirement
Written by
Chris Adam
Edited by
Amber Barkley
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If you want to be happier in retirement, set up some kind of guaranteed income. According to a recent study by the Employee Benefit Research Institute (EBRI), it’ll not only bring you more financial security as a retiree, it’ll also give you more confidence.
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This may be especially true in situations where inflation is hurting the spending power of retirees.
Guaranteed Income
According to EBRI, “Having guaranteed income as a component of current income is positively correlated with strong well-being in retirement.”
That’s the good news. Here’s the bad news: It may not be as easy as you might think.
“The problem for many American workers: Forms of guaranteed income are getting rarer,” CNBC wrote. “Only about 35% of current retirees have pension income, and that number is likely to shrink.”
Pensions and Investments
One reason is that employers have been eliminating pension plans. They’ve switched to options such as 401(k) plans, which help shift the burden to employees to save.
It’s probably also not wise to plan to rely too much on Social Security, which is only designed to replace some of your pre-retirement income.
You might be thinking your plan for retirement is to regularly take out money from your investments to cover expenses. If so, the volatility of the markets means that income is not guaranteed.
How To Guarantee Your Retirement Income
So, what’s left? Here are three avenues to explore for more guaranteed income in retirement.
Annuities
You might consider an annuity. Insurance companies sell annuities, which guarantee you, as a policy holder, a certain amount of income over a set time period.
Typically, you’d put in a big sum of money up front, then receive annual payments at the agreed-upon rate of interest.
Dividends
You could also look into dividend income for a happier retirement. Many companies distribute some of their profits to shareholders through cash payments known as dividends.
Retirees can use the dividends for income and potentially ignore the ups and downs of stocks to focus on bringing in steady cash.
Real Estate
A third option may be a bit more work than many retirees want to take on: You could bring in steady income in retirement by owning rental properties.
If you don’t have help, though, being a landlord can be a ton of work.
Plans and Savings
No matter what you’re planning for retirement income, you should also make it a priority to have an overall plan and a good deal of savings.
“A lack of sufficient savings and retirement preparation negatively influences retirees’ spending outlook, particularly among those with total annual household incomes below $50,000,” wrote Bridget Bearden, Ph.D., research and development strategist at EBRI. “Compared with 2020, fewer retirees indicated that they would spend down all or a significant portion of their financial assets over the course of their retirement.”
You may want to have some professional assistance in retirement planning. In fact, it could help you feel better. According to the data, retirees who work with a financial advisor are more likely than their peers to report being satisfied with their retirement.
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