Saving for “retirement”? Generate Lifetime Income Instead – NerdWallet

Let’s blast the illusion of New Year’s financial resolution. Instead, make a plan that will change your life.

Rather than saving money for “retirement”, aim to generate a specific future monthly income that can be a stepping stone to how do you really want to spend your time.

Here’s how to realistically plan and generate income for life.

For reasons we’ll get to in a moment, we’re looking at the two main ways to generate long-term cash flow: spending savings or buying an income stream.

Your nest egg is a long-term savings reserve that you have diligently accumulated over time. It’s a 401(k), an individual retirement account, an investment account, or a cache of money hidden away in the basement. And it’s a cashwhich means you can spend it – it’s not real estate or metaverse property.

This sum needs to be spent over time for it to last as long as you do, so it’s probably invested in a diversified portfolio. A formula called the 4% rule comes into play here. It’s a basic guideline that says you can spend 4% of an invested portfolio each year, adjusted annually for inflation. Average investment returns should help offset withdrawals over time, extending the shelf life of your money.

Invest a lump sum in a annuity will also provide a lifetime income stream. Annuity sales have set records in recent months, according to the Life Insurance Marketing and Research Association.

As with many insurance products, annuities can take time to figure out. You will want :

• Know the benefits you will receive and how long they will continue.

• Ask what the issuing insurance company’s credit rating is. The more A’s in the rating, the better (AAA, AA+, etc.).

• Understand how a rise or fall in the stock market will affect the value of the annuity, if applicable.

When reviewing an annuity, the insurance company will show you several “illustrations” depicting “likely performance” over time. Use this Ministry of Labor lifetime income calculator as a reality check.

Finally, there is growing interest in allowing employers to add pension-style payment options to 401(k) retirement plans. If the integrated annuity has low fees and good benefits, it could be a game-changer for young workers’ retirement security.

There are other ways to generate an income stream for the rest of your life that we’re not considering here: a viral TikTok or YouTube channel, social security. Oh, and winning the lottery. Let’s just say most of us shouldn’t rely on them. Sure, this hilarious lip-sync might be buzzing on social media for a while – but income for the rest of your life? Uh no.

Let’s not even talk about social security right now. We are still waiting for the government to decide on the cancellation of student loans.

And what about all those “I make $40,000 a month and I only work two hours a day” passive income programs you see daily in your News Feed? Bookmark this story and check out their website in a few years. It will likely display a “this domain is for sale” notice. Selling online courses and explainer videos is a quick proposition.

Stick to conventional methods of generating sustained income, and if kismet hits, treat it like gravy.

First, it’s clear that our phones are listening to us. I mean, how can they show us an ad for something we just talked about in the kitchen over a glass of wine? And now we know Big Data is following us too. Even when they’re not supposed to.

Google will pay nearly $400 million to 40 states in a consumer privacy settlement. A group of state attorneys general said Google continues to track users’ movements and location even when consumers believe they have disabled location tracking features in their device settings. This information has been shared with advertisers – and it has been going on since “at least 2014”, the attorneys general said.

In addition to monetary settlement, Google needs to provide more information to users about its tracking methods.

In our reflex world, many people quickly jump to conclusions. With the latest cryptocurrency failuresthere are those who proclaim that Bitcoin and its digital brethren are not long for this world.

Investment fraud plundered many wallets. Madoff, Ebbers, Lay & Skilling and, yes, the namesake of pyramid schemes, Mr. Ponzi himself, have ravaged the riches of trusted clients. If all your eggs are in one basket and someone steals that basket…

The biggest crypto risk is mixing a DeFi Technology with a centralized platform. If you trade and store your crypto only on an unregulated exchange rather than combined with – or exclusively on – a crypto wallet that you controlyou will always live at the mercy of the unscrupulous.