Before retirement, everyone wants to have a financial plan that ensures sustainable annual
income for lifetime in retirement years. No matter it is for essential living expenses
(food, clothing, housing, transportation, etc),
medical care spending, long-term care costs, or entertainment, we need a solid plan to make our money last our lifetime with sustainable purchasing power.
The finanicial plan should also tell us how much we can afford to safely spend each year with inflation-adjustment,
so that we will not have to spend just the minimum amount to get by, which would improve our quality of life.
However, this is not an easy task for most people
to convert retirement assets into sustainable annual income for lifetime. Several big unknowns include:
-
we do not know how long we will live
(we even typically underestimate our life expectancy).
-
we cannot predict what our health conditions will be decades later.
-
we even do not know how the stock market, tax rates, and inflation will behave
many years later in our retirement.
-
we cannot foresee if cognitive decline will prevent us from making sound financial decisions
(33% of Americans over age 85 are afflicted with Alzheimer’s disease).
Thus, planning for sustainable lifetime income in retirement is a challenging task.
It is better to do it with the help of a qualified professional, and do it early.