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During your working years, your employer may have deposited your paycheck into your bank account and automatically handled “back-end” issues, like deducting taxes, health insurance premiums, and 401(k) contributions. After retirement, those details — and how to budget for them — become your responsibility. Here are some ways to manage your monthly income in retirement.
Before you retire, think about where your money will come from when you stop working. Start by assessing your stable sources of income.
Social Security is a stable source of income that lasts the length of your retirement. The amount you receive each month depends on your eligibility, the number of years you paid Social Security taxes, and when you begin collecting benefits.
Some retirees have a pension from a past employer. You can choose to take pension benefits as a lump sum, in payments, or a combination of both. Pension funds can also be rolled into an Individual Retirement Account (IRA), giving you control of where and how the money is invested.
You may have or you may wish to purchase an annuity, which is a type of insurance policy. Annuities are flexible financial tools that may offer lifetime income with regular payments.
Annuities are either fixed or variable. With a fixed annuity, your payments have a fixed rate of return guaranteed by the insurance company. If you choose a variable annuity, benefits paid will be dependent on the underlying investments.
After you’ve identified your income streams, decide how and when you’d like to receive your money. Because your needs will likely change, flexibility and variety will help you adjust when the unexpected happens. You can:
Revisit your decisions regularly to ensure they’re meeting your needs. Think of it as a living plan. A Financial Advisor can help make sure you are firmly in control of your retirement paycheck.
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Guarantees are based on the claims-paying ability of the issuing insurance company. Guarantees apply to minimum income from an annuity; they do not guarantee an investment return or the safety of the underlying funds.
Fixed annuities may have a higher initial interest rate which is guaranteed for a limited time period only. At the end of the guarantee period, the contract may renew at a lower rate.
Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.
These articles have been prepared for informational purposes only and are not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each investor’s situation is unique you need to review your specific investment objectives, risk tolerance and liquidity needs with your financial professional(s) before a suitable investment strategy can be selected. Also, since Wells Fargo Advisors does not provide tax or legal advice, investors need to consult with their own tax and legal advisors before taking any action that may have tax or legal consequences.
Retirement Professionals are registered representatives of and offer brokerage products through Wells Fargo Clearing Services, LLC (WFCS). Wells Fargo Advisors is a trade name used by WFCS and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. Discussions with Retirement Professionals may lead to a referral to affiliates including Wells Fargo Bank, N.A. WFCS and its associates may receive a financial or other benefit for this referral.
Wells Fargo Bank, N.A. is a banking affiliate of Wells Fargo & Company.
An immediate annuity provides a consistent, reliable stream of income that is guaranteed for a specified period or life.
An annuity is a tax-deferred investment with an insurance component that you pay into, either all at once or in installments.
A fixed annuity allows you to invest for retirement with a fixed rate of return, and not pay taxes until you withdraw your money.
Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk.