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The Evolution of Retirement Income

The Evolution of Retirement Income

March 15, 2023

It’s hard to believe, but 2023 will be my twenty-fifth year with Harford Financial Group. I know many of our clients have been with us for even longer! Through the years together, we have seen a lot of changes in the investment landscape, from bull to bear markets, decent to non-existent interest rates, and back again. Through it all, I’ve learned that history often rhymes but never repeats itself. With time comes evolution, and thankfully, our retirement income tools have done just that: evolve.   

For example, the 1990s saw many people retire with pensions. Industry professionals often refer to pensions as one leg of our retirement income stool, with Social Security and investment distributions making up the other two legs. However, with each year that passes, we see fewer and fewer people with three legs on their stools, making many investors feel unsteady.

Folks with higher guaranteed income options in retirement historically experience greater financial freedom while worrying less. In addition, these investors can enjoy the things that make their hearts happy such as traveling, gifting, and having the space and the permission to relish in the life they worked so hard to obtain. But how can we do this when historical retirement planning methods are becoming less and less available to us?

Our HFG Advisory team wants nothing more than to aid in our clients’ retirement preparation so that they may live the life they envisioned. Thankfully, interest rates are experiencing a comeback making new, evolving approaches and strategies feasible. Investment vehicles such as CDs, bonds, and annuities are becoming increasingly more attractive, thus making them good additions to our retirement income toolbox. Our team continuously researches evolving methods so that clients can secure predictable or guaranteed lifetime income. For example,  

  • We analyze clients’ Social Security filing options and work to maximize their benefits.
  • Our team reviews strategies to utilize assets, such as business ownership or real estate, as tools to replace the income from work.
  • Our vast knowledge of life insurance and annuity products is crucial in stabilizing income streams for suitable investors. 

Using such strategies, our clients can increase their predictable monthly income in retirement and, in many cases, add that extra leg to their retirement income stool. 

Our team is also looking at making income solutions more tax efficient. Specifically, we use the historically low tax rates (due to expire after 2025) to convert dollars to a Roth or take distributions for income purposes. Such an approach allows us to pay less tax now than later. The goal is to manage taxes today while projecting ahead when taxes may increase.

As you can see, our firm encourages a proactive approach. In collaborating with your HFG advisor team, you are planning for the twists and turns of life. We hope you live life to the fullest, and we are here to help you map that life out using our expertise. 

Disclosure: Investing in securities involves risk of loss.  Further, depending on the different types of investments there may be varying degrees of risk.  Clients and prospective clients should be prepared to bear investment loss including loss of original principal. All guarantees of annuities products are backed by the claims paying ability of the issuing insurer.