Ask the Retirement Expert: What Kind Of Retirement Income Can I Generate With 1-million dollars?
Each week our Northwestern Mutual retirement experts answer your questions. This week’s question:
What kind of retirement income can I generate with 1-million dollars in savings?
This is a simple question that generates many more questions before I can answer it.
In order to create the most efficient income in retirement, you’d want to consider other factors besides the $1-million in savings. I’d need to know how that money is invested. Is it in an after-tax account, or is it in a pre-tax 401k or an IRA? Are you eligible for social security or a pension? How old are you? What kind of income are you looking to have available to you in your early retirement years versus your later years? Are you trying to create income for your own lifetime, or do you also need to create income for a spouse or partner upon your death? What is your tax bracket?
I don’t mean to make this more complicated, but the challenge with retirement income planning is that there are so many other important pieces that go into creating retirement income for you every month. It used to be simpler in the old days when we could safely assume a 4% rate of return after taxes. Now with so many other factors to consider—including market volatility—planning for retirement income requires a more well thought out strategy. A financial professional can help you identify your goals and build a financial plan to help you achieve them.
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