Broker Check

A Walk Toward Reliable Retirement Income

October 17, 2023

Which sounds better to you, a chance at taking your dream vacation or the guarantee that you are going on your dream vacation? When it is locked in and guaranteed, you can see yourself there. You can smell the salty air at the beach. You can see the natural wonders in front of you or feel the warmth of a fire in a secluded mountain cabin. Just like in a dream getaway, when it comes to retirement income, I’ll gladly pass on the chance and take a full order of the guaranteed.

At Harford Financial Group, we use the term probability-based income to define the money you have saved in your investments. The probability of it going to zero is unlikely, but at the same time, the volatility it experiences can affect your cash flow. Picture this, you’re in retirement, and your retirement plan makes up the largest portion of your income. You know the market fluctuates, but then there is an 18% drop in the market like we experienced in 2022. If we are talking real numbers, that’s a $180,000 loss in a $1 million portfolio. You begin to think, Will I recover from this? Do I cut out that extra trip on my bucket list? Do we take it easy at Christmas this year? In this situation, your emotions and decision-making skills are largely tied to factors you cannot control. And a poorly thought-out social media post from a CEO halfway across the country dictates what you can and cannot purchase. With the lack of market control, you begin to fear that the investments you spent your working years accumulating will not provide the income you depend on. 

Let’s walk another path. You are that same person with $1 million in retirement. However, you are receiving Social Security; you have a pension and an income annuity. Between these three sources, your needs are met, and you don’t rely on your invested assets. We experience that same 18% market drop, and you see no effect on your day-to-day cash flow. Would you sleep more soundly at night? How much easier would it be to say yes to spending money on new experiences? Instruments such as Social Security, pensions, or income annuities are what Harford Financial Group defines as guaranteed or promise-based income. They are promise-based because the stock market can go on a roller coaster ride, and CEOs can post on social media to their heart’s content, with zero impact on these income sources. I don’t know about you, but guaranteed income sounds nice at this point.

Now, these two scenarios represent the outer extremes of most retirement situations. There are not many individuals that only rely on invested assets for retirement income, and there are not too many people that don’t have some level of guaranteed income. Regardless of the circumstances, the number one concern for our clients entering and in retirement is the fear of running out of money. Our goal at Harford Financial Group is to create greater financial confidence for our clients by exploring all available income options. If you are ready to discuss maximizing your retirement income, please call our office to schedule a meeting. We cannot wait to walk you down the road toward a happy, stress-free retirement.