Relationships Between Pensions, 401(k)s, IRAs, and Retirement Income Planning

As we move past the halfway point of the year, the time is now to review your retirement strategy and check that your savings are positioned to support your long-term goals.

For many Americans, retirement income no longer comes from just one source. While traditional pensions have become less common over the years, many people approaching retirement still have access to some type of pension benefit, along with 401(k)s, IRAs, and other savings accounts. The challenge is figuring out how all of these pieces work together to create reliable income throughout retirement.

A big decision some retirees may face is what to do with a pension benefit. Some plans offer the choice between receiving a monthly income stream for life or taking a lump-sum payout. While a lump sum can provide flexibility in the present moment, it also places the responsibility of generating consistent retirement income directly on the retiree. Then there are many retirees who are relying heavily on their 401(k)s and IRAs to help fund retirement. But without a true strategy in place, it can be difficult to determine how much to withdraw, when to withdraw it, and how to make your savings last.

It’s important to understand how your retirement accounts, Social Security benefits, and other income sources, as well as your pension for those who have one, work together to support your lifestyle and address future expenses such as healthcare costs and inflation.

Contact us for a mid-year review and consider asking yourself:

• Do I understand all of my pension payout options?
• How will my 401(k), IRA, and other retirement accounts generate income?
• Will my current strategy support my lifestyle long-term?
• Have I reviewed my retirement income plan recently?

The good news is that there is still plenty of time this year to make meaningful adjustments.