Retirement income continues to be a key focus for retirement savers, and while most retirement planning software defaults to the assumption that retirees would be fine with consuming their principal to fund their retirement, this may come as a surprise to many clients, who instead plan to rely only on income generated from their portfolio. In fact, recent J.P. Morgan research revealed that nearly 7 out of 10 individuals are concerned about outliving their money in retirement.
For this reason, it’s critical that advisers ensure their clients understand the various retirement income options available, including the various pros and cons:
Once clients are aware of the various approaches, and what may be best suited to their circumstances, settling on the most appropriate strategy to help them achieve a secure retirement should be a priority.
Ideas for clients who are concerned about market risk or are reliant on principal withdrawals include:
By laying out the pros and cons associated with various retirement income approaches, advisers can effectively guide clients on the appropriate strategy to meet their retirement objectives. There's no right or wrong answer here — just an informed decision that should be tailored to ease the way for nervous clients, regardless of their retirement income source.
Sharon Carson is a retirement strategist at J.P. Morgan Asset Management.
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