Retirement
Meet Mary. She set aside a portion of her paycheck each month to build her retirement savings. But now Mary needs to start thinking about her income strategy or how and when she'll withdraw her retirement savings to generate income. An income strategy will help her budget so that her savings will last the next 20 or even 30 years in retirement. Watch this video for a look at Mary's income strategy options.
Meet Mary. She can't wait to retire so she can spend more time with her grandkids.
She is a great saver. She set aside a portion of her paycheck each month to build her retirement savings. After years of working, she's grown her retirement savings to an amount that she can be proud of.
But now Mary needs to start thinking about her income strategy or how and when she'll withdraw her retirement savings to generate income. An income strategy will help her budget so that her savings will last the next 20 or even 30 years in retirement.
As part of her strategy, Mary weighs the importance of access and protection. She wants access to her money, but she also wants protection against spending it too soon.
Let's look at Mary's income strategy options.
Option One: Mary could take a lump sum distribution of her entire retirement savings. This would allow her full access to all of her money, but she's hesitant. Up until this point, she based her budget on her monthly paycheck. With full access to her entire savings, she knows that there's a risk that she will spend down her money too quickly. Plus, she wants to avoid paying the high taxes that often come with a lump sum distribution.
Option Two: Mary could roll over her savings into a traditional individual retirement account (IRA). Like the lump sum distribution, the rollover gives her full access to her money and has the potential to grow if she reinvests it. But she's concerned about the fees and commissions that may be associated with setting up and managing an IRA, and she's wary of market fluctuations. She might lose money if the market takes a downturn.
Option Three: Mary could use a systematic withdrawal plan (SWiP). With a SWiP, she can keep her savings in her employer's retirement plan. Her money remains accessible, and she can customize the timing and amount of her withdrawals. But she knows that she has to pay close attention to her withdrawals so she doesn't withdraw too much too soon.
Option Four: Mary could purchase a guaranteed lifetime income product available through her employer retirement plan using all or a portion of her retirement savings. Purchasing a guaranteed lifetime income product provides her a fixed stream of income just like her paycheck did. Although she will not have access to the funds she uses for this purchase, she knows that she will receive a guaranteed paycheck for the rest of her life.
After reviewing her options, Mary decides that the best income strategy for her is the combination of a SWiP and a guaranteed lifetime income product using a portion of her retirement savings. The SWiP will provide her with money for unexpected expenses, and the guaranteed lifetime income will provide her with money for everyday expenses. The combination of a SWiP and guaranteed lifetime income product will give Mary access to her money and the protection of a guaranteed income stream that she can rely on for the rest of her life.
As you near retirement, it's important to start learning about the options available to you to create your income strategy. And like Mary, you might find that the best strategy combines access with protection.
Use MetLife’s interactive tool to discover if you have a retirement income gap—the difference between your anticipated retirement income and estimated monthly expenses.
