6 Things to Look for in a Retirement Income Plan

While most retirees may receive some level of income in retirement from Social Security, it will most likely not be enough to cover all of their expenses.

As you probably know, Social Security benefits aren’t meant to replace 100 percent of a retiree’s working salary. At the current rate, retirees receive, on average, about 40 percent of their annual working income1.  

Any gap in the income they’ll receive from Social Security can be supplemented with income from many sources, including pensions, annuities and even part-time employment.

For many retirees, converting a portion of their nest egg into a retirement income plan is an ideal way to bring in the extra funds needed to help cover living expenses and other costs.

Here are six factors retirees should consider when creating a retirement income plan:

1. Guaranteed lifetime income - establishing a stream of predictable income can help to reduce financial risks in retirement, from stock market fluctuations to unforeseen events. The U.S. Census Bureau predicts that by 2030, there will be more than 9 million Americans over 85 years of age2. This increased lifespan could also increase exposure to financial risks, including longevity risk — a risk multiplier for many others. One way to help reduce longevity risk is by establishing retirement income that is guaranteed to last for life, no matter how long that life may be.  
2. Retirement goals - budgeting for retirement goals can be crucial for a successful retirement income plan. When income is already allocated for fun activities and retirees can see that their other expenses also have income earmarked, they can more confidently enjoy the things on their wish list.
3. Challenges and concerns - just like during our working years, unexpected challenges (and even expected ones) may occur. But when we incorporate them into our retirement income plans, there can be funds earmarked to address these “what-ifs” that could otherwise negatively impact our retirement funds. 
4. Some level of protection from inflation - historically, inflation has fluctuated quite a bit3. Of course, this is no predictor of future inflation rates. Yet, even a 1- or 2-percent annual increase could quickly add up over a 20- or 30-year retirement. Without some type of income that attempts to keep pace with future inflation, retirees could see their purchasing power — and their money — diminish quicker than they intended. 
5. A familiar financial approach - conventional wisdom says once retirement arrives, we’re supposed to make the switch from managing finances on a monthly basis to managing a large lump sum. This approach is not only unfamiliar, but most of us have been programmed to never spend our savings. Instead, retirees could help ensure funds from their retirement income plan are distributed monthly, so they can be better set up for success in managing them.
6. Minimal asset commitment - many retirees may be surprised to discover that just because two income plans generate the same amounts of income doesn’t mean their price tags are the same. The financial products and algorithm used, along with a few other key factors, like age and gender, could help determine the cost of the retirement income plan. Retirees can find a retirement income plan that helps to provide the income required for their goals and expenses This may help to provide peace of mind for the road ahead, and greater access and control over their money.

At Heyday, we truly believe that retirement should be a reward, not a time to worry about whether your money will last as long as you need it to. That’s why our retirement income planner app uses an approach that helps to deliver on all the “should-haves” listed above.

If you’re ready to discover what your retirement income plan could look like, our retirement income planner can customize a plan based on your specific goals and challenges.


1Understanding the Benefits. Social Security Administration. https://www.ssa.gov/pubs/EN-05-10024.pdf

2U.S. Census Bureau. 2017 National Population Projections Tables. Table 2. Projected age and sex composition of the population.  https://www.census.gov/data/tables/2017/demo/popproj/2017-summary-tables.html

3Historical Inflation Rates 1914-2018. U.S. Inflation Calculator. http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

Materials offered by Heyday Retirement, including articles, ebooks, and workshops are designed to provide general information on the subjects covered. They are not intended to provide specific financial, legal or tax advice. Heyday markets insurance products and its representatives do not give investment, legal or tax advice. You are encouraged to consult your tax advisor, attorney, or investment advisor.

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Cindy Collins

Written by Cindy Collins

Forbes Contributor & Retirement Financial Professional

Cindy Collins is a Heyday Retirement contributor with over 30 years of experience in personal financial services.

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