Retirement Income

Retirement income is, quite simply, the income one has to live on in retirement.  It can come from a variety of sources: personal savings, Social Security, traditional pension plans, and defined contribution savings programs.    

Setting aside the somewhat persistent theme that Americans are not saving enough, the more important question may be, "Can retirees manage their money well enough to ensure their savings last as long as they do?"

The process of managing retirement income requires an understanding of the source(s) and amount of retirement income available, an appreciation of the overall financial status and needs of the participant, and an awareness of the aspirations of the participant.

We all know how difficult it can be to encourage workers to save for retirement, much less to save enough for retirement (setting aside for a moment the issue of what "enough" and “retirement” might actually mean on an individual basis). After having spent their careers helping participants save for retirement, few plan sponsors are anxious to see those savings frittered away. 

For plan sponsors, the message is both optimistic and ominous. Retirement savings efforts are paying off—but, in too many cases, that "payoff" is coming years before the participant’s actual retirement. Moreover, good intentions and prior behaviors notwithstanding, once that money is “in hand,” it all too frequently becomes a tempting target for some “here and now” consumption.

Once the distribution leaves the plan, there is little a plan sponsor can do to influence the result.  However, participants are increasingly comfortable leaving their savings within their employer-sponsored plans.  Aside from the “soft” benefits of contributing to a participant’s post-retirement income security, those accumulated balances can result in more assets in the plan—and, potentially, the ability to negotiate for better fees.