How a ‘Blended Income’ Strategy Can Boost Retirement Cash

Retirement planning is becoming increasingly challenging for Americans, especially with more people reaching retirement age this year than ever before. A recent study by Fidelity Investments revealed that confidence in retirement prospects has decreased, with rising living costs eroding savings for 70% of retirees. Additionally, a survey from The Senior Citizens League found that 67% of seniors rely on Social Security for more than half of their income, highlighting the need for a more comprehensive retirement plan.

One effective strategy to enhance retirement security is through a blended income approach. This strategy involves combining multiple sources of fixed and variable income to create a diversified and steady cash flow. According to a survey by Goldman Sachs, retirees with a blended income strategy reported a better lifestyle and higher levels of satisfaction with their finances compared to those relying solely on Social Security.

Fixed income sources such as annuities, bonds, and pensions provide predictability and stability, while variable income sources like IRAs, 401(k)s, and investment accounts offer growth potential. By combining both types of income, retirees can benefit from the advantages of each while mitigating the risks associated with market fluctuations.

Before implementing a blended income strategy, it is essential to assess your risk tolerance and determine the ideal mix of fixed and variable income sources. Financial planners like Jaime Ruff recommend creating a financial plan that considers all sources of income, including pensions, Social Security, and post-retirement earnings. This plan should align with your long-term financial goals and address any potential income shortfalls.

Fixed income options such as bonds and annuities provide guaranteed returns but may come with high costs. On the other hand, variable income sources like equities and real estate offer greater access to funds but carry higher risk. By diversifying your income sources, retirees can better protect themselves against market volatility and ensure a steady stream of cash flow in retirement.

In conclusion, a blended income strategy can help retirees navigate the challenges of retirement planning and achieve financial security in their golden years. By carefully balancing fixed and variable income sources, individuals can create a resilient financial plan that meets their income needs and long-term goals.