Converting part of your retirement savings into a predictable income stream can help cover essential expenses. This can be achieved through various methods, including setting up a portion of your nest egg to produce a predictable amount of income every year or annuitizing a portion of your savings.

Creating a Paycheck in Retirement

Creating your own paycheck in retirement can spare you from the fear of running out of money. Retirees have to manage their assets without knowing how long they will live, how markets will perform, or how high inflation will be. This uncertainty can lead to underspending in retirement, causing retirees to live less well than they might.

A study found that retirees who hold a greater portion of their wealth in guaranteed income, such as that from a pension or annuity, spend more than retirees who hold the greatest share of their wealth in investments. This suggests that having a predictable income stream can help retirees feel more comfortable spending their money.

There are various ways to set up a paycheck in retirement, including setting up part of your nest egg to produce a predictable amount of income every year through interest-bearing bonds and certificates of deposit. Another approach involves annuitizing a portion of your savings, which can ensure predictable income but also places limits on your ability to get any remaining money out.

Annuities can be complex and expensive, and it is essential to do your research and work with an accredited financial adviser to get the best guidance. It is also crucial to compare offers from different insurers and ask how your adviser is being paid for any product recommended.

Original reporting: El Paso News (HLL/CB) — read the source article.