Retirement plan professionals believe that workers might increase their retirement savings if they only knew how much retirement income their accounts could possibly generate. Why might retirement income statements be a trap for the unwary? The problem with this situation is that fixed annuities often generate more immediate income than most other retirement income generators; in some cases, annuities generate up to twice as much retirement income compared to other retirement income generators. And if you blindly rely on the retirement income estimate, you might retire earlier than you should if you want that retirement income to completely cover your living expenses in retirement. Before you turn 50, retirement is still far enough away that it’s probably OK to use your retirement income statements to help you decide whether you should increase the amounts you save for retirement.

Source: Forbes November 12, 2020 23:37 UTC