When You Retire Without Enough

Start your “second act” with inadequate assets, and your vision of the future may be revised

How much have you saved for retirement? Are you on pace to amass a retirement fund of $1

million by age 65? More than a few retirement counselors urge pre-retirees to strive for that

goal. If you have $1 million in invested assets when you retire, you can withdraw 4% a year from

your retirement funds and receive $40,000 in annual income to go along with Social Security

benefits (in ballpark terms, about $30,000 per year for someone retiring from a long career). If

your investment portfolio is properly diversified, you may be able to do this for 25-30 years

without delving into assets elsewhere.1

Perhaps you are 20-25 years away from retiring. Factoring in inflation and medical costs, maybe

you would prefer $80,000 in annual income plus Social Security at the time you retire. Strictly

adhering to the 4% rule, you will need to save $2 million in retirement funds to satisfy that


There are many variables in retirement planning, but there are also two realities that are hard

to dismiss. One, retiring with $1 million in invested assets may suffice in 2018, but not in the

2030s or 2040s, given how even moderate inflation whittles away purchasing power over time.

Two, most Americans are saving too little for retirement: about 5% of their pay, according to

research from the Federal Reserve Bank of St. Louis. Fifteen percent is a better goal.1

Fifteen percent? Really? Yes. Imagine a 30-year-old earning $40,000 annually who starts saving

for retirement. She gets 3.8% raises each year until age 67; her investment portfolio earns 6% a

year during that time frame. At a 5% savings rate, she would have close to $424,000 in her

retirement account 37 years later; at a 15% savings rate, she would have about $1.3 million by

age 67. From boosting her savings rate 10%, she ends up with three times as much in

retirement assets.1

Now, what if you save too little for retirement? That implies some degree of compromise to

your lifestyle, your dreams, or both. You may have seen your parents, grandparents, or

neighbors make such compromises.

There is the 75-year-old who takes any job he can, no matter how unsatisfying or awkward,

because he realizes he is within a few years of outliving his money. There is the small business

owner entering her sixties with little or no savings (and no exit strategy) who doggedly

resolves to work until she dies.

Perhaps you have seen the widow in her seventies who moves in with her son and his spouse

out of financial desperation, exhibiting early signs of dementia and receiving only minimal

Social Security benefits. Or the healthy and active couple in their sixties who retire years

before their savings really allow, and who are chagrined to learn that their only solid hope of

funding their retirement comes down to selling the home they have always loved and moving

to a cheaper and less cosmopolitan area or a tiny condominium.

When you think of retirement, you probably do not think of “just getting by.” That is no

one’s retirement dream. Sadly, that risks becoming reality for those who save too little for the

future. Talk to a financial professional about what you have in mind for retirement: what you

want your life to look like, what your living expenses could be like. From that conversation, you

might get a glimpse of just how much you should be saving today for tomorrow.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.



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How to Maximize Your Pension Benefits

How to maximize your pension benefits. Pension maximization is an effective strategy for married individuals who are current participants in a pension plan. It helps them receive their maximum retirement benefit and guarantees their surviving spouse an income after their death.  

To understand how pension maximization could impact your retirement, consider this example:

You choose to receive $4,000 per month in your retirement and ensure that your spouse receives the same. Choosing this option would give you $1,000 less per month for your entire retirement - $12,000 less per year or $120,000 lost for every 10 years in retirement. Because people continue to live longer, you could live 30 years in retirement, costing you $360,000 if you fail to plan your pension properly.  

Selecting the life only option ($5,000 per month - the maximum available) for your monthly pension income may ensure you receive the highest amount available. You may use the extra income to purchase a life insurance policy so your spouse will be protected and receive tax-free income from the proceeds upon your death. If your spouse predeceases you, you continue to receive the highest monthly benefit and have the option to reassign your beneficiaries or cancel your life insurance.  

In either situation, both spouses are protected and can maximize the income provided by the pension. With pension maximization, you receive the maximum income from your pension and also help make sure your family is taken care of.  

One of the most important decisions you will face when you leave your job is deciding which pension option to choose. By making the right choice, you can maximize your income and preserve your surviving family’s financial security in the event of an unexpected death. Remember, the pension choice you make is IRREVOCABLE. Contact a Beacon Financial representative today to explore your options.  


*Example used as illustration only, not indicative of any particular situation, actual results will vary. Guarantees are based on the claims-paying ability of the issuer.

This information is general in nature and should not be relied upon for financial decision. As with any financial matters, please consult with your financial professional before taking any action.