Have you looked at your retirement savings account lately? As you make your New Year’s resolutions, consider making retirement planning one of your goals. We were recently asked to look at whether other countries' experiences with plans similar to 401(k) plans offer any lessons for the US. We also developed an interactive retirement model to help explain how inflation and other forces can impact retirement income.
How will I spend down my savings?
In planning how to spend down retirement savings, you should understand how inflation, interest rates, investment returns, and even delaying retirement can affect your retirement income.
If you have a 401(k) or IRA, you may be considering whether to purchase an annuity, systematically draw down your account balance, or both when you retire. Your monthly income from each of these options will depend, in part, on factors such as changes in inflation or interest rates.
For example, even modest inflation can erode your purchasing power, especially later in your retirement. See how changes in the inflation rate can affect retirement income no matter how you plan on spending your savings:interactive retirement model. If you’d like to know more about what the federal government and other countries are doing to help people make more informed decisions about spending their retirement savings check out the full report.