One of the more confounding issues that pre-retirees must wrap their head around is how to create a growing stream of income from their savings after their paycheck stops. To solve for this, consideration should be given to various pieces of a retiree’s financial life. How much income will they need to maintain their lifestyle? How much did they save for retirement? How did they save, in pre-tax retirement plans and/or in taxable accounts? How is their money invested? What decisions are they making around guaranteed sources of income (such as Social Security and /or pensions)? And the list continues!
According to a study by the Employee Benefit Research Institute,