Creating Retirement Income Through a Personal Pension Plan

The traditional method of saving up and paying for retirement gets harder every year. For most people, social security, pensions, and 401Ks just won’t be enough. And, most pre-retirees and retirees cannot afford to take financial risks. No matter the preparation, consider this fact. People are living longer, and retirees need income that will last throughout the later stages of life.

So what can I do to obtain more retirement income?  One solution may be to create a “Personal Pension Plan”. This is a method that many use to create a guaranteed income stream that will last throughout your life. Here’s what you need to know about it.

Why a Personal Pension Plan?

The Personal Pension Plan provides a stream of income for as long as you live, and can provide the same benefit to your spouse.  Your own Personal Pension Plan needs to be tailored to fit your needs and desires. It is not a one-size-fits all model. Most importantly, the Personal Pension Plan can be designed, funded, and implemented using guaranteed income products without the market risks associated with stocks and bonds. 

Using Fixed Indexed Annuities to Create your Personal Pension Plan

An annuity is a contract between a person and an insurance company. The contributor will provide payments for a specified period which leads to periodic payouts in the future. This is a path to creating a guaranteed income stream.

They are tax-advantaged, meaning you won’t have to worry about your money getting taxed until you withdraw. It can also be a way to compound your savings until it reaches a point where you’re satisfied with its guaranteed payouts.

There are two types of annuities one can begin working on for their retirement income. An immediate one will begin payments as soon as possible. However, the contributor must pay a lump sum. This is usually possible when they receive a windfall, like a back pay, tax returns, or an inheritance.

Most people will opt for deferred annuities. These allow people to accumulate money in an account. The advantage is that the money is placed into investments, meaning that it has the potential to grow over time. The annuity will convert into a guaranteed income stream for the retiree at a set time based on the agreement.

A personal pension plan will consist of these annuities, and knowing that you won’t outlive your money provides peace of mind. There are even provisions where the payouts can move to your spouse or a beneficiary in case something happens. These plans are generally safer because you have the assurance provided by the insurance company.

Creating a Personal Pension Plan

A personal pension plan begins with your goals and needs during retirement. The first thing you need to consider is your supporting income streams. While it will make up for a significant part of your income, it’s good to have numerous sources to help you maintain your desired lifestyle. These may include the traditional pension and social security.

You’ll need to consider what lifestyle you desire during retirement. Many retirees have plans they’ve been holding until retirement. Figuring out your living situation and regular spending should be part of the plan. There must also be space for emergencies, meaning that you should have extra income saved.

From there, it’s all a matter of spacing the money and considering how much you need and when you need it. This can be overwhelming, but that’s where professionals come in.

Getting Professional Help

One of the advantages of having professionals on your side is that they’ve helped many other retirees achieve the same thing. You’ll have the counsel of people who have successfully crafted plans that led to comfortable retirements. With your help, they can analyze your income sources and planned retirement lifestyle. They will then help you set up a personal pension plan and will help you reach that goal.

Another thing they’ll help you with is to simulate the risk involved with investments. This allows you to get a picture of the potential growth of your money based on past performance. While it isn’t a guarantee, you can get several scenarios and prepare for them adequately. Investments are a significant part of retirement plans and will help you get enough money to fund your long retirement.

The personal pension plan isn’t something you can replicate for each person planning retirement. Everyone wants different things, and risk tolerance will also vary. Some people may want to place their money in safer vehicles to ensure they get the same amount during retirement. Others may want to risk more for the chances of the money growing.

Your planner may also help you structure when you should move money around. Planning for the annuities you put your money into will help you. For example, you can begin funding several accounts with different timeframes. A low-risk basket can work for the short-term, ensuring you have money soon after retirement. A higher risk basket can stay behind the scenes for five years and beyond, increasing the chances of growth.

Need Help Creating a Personal Pension Plan?

When it comes to planning retirement, you cannot take risks. Professional help will give you insight into the future. You’ll know what to do to achieve your vision for tomorrow.

If you’re looking for help, contact Safe Wealth Plan today. Our team will answer any concerns and work with you to create your desired personal pension plan. With us, you have a better chance at succeeding and ensuring you have money even 10 or 30 years after retirement. We believe that annuities play a vital role in retirement, and we want to educate you so you can choose the best options available.

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