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A lot of retirement guidance I have read lately continues to treat baby boomers the same as the rest of the investor public. Even after the first six months of 2022, when the traditional 60/40 stock/bond portfolio sank more than 20%.
I may not dispute the traditional approach for investors who are 25, 35 or 45 years old and accumulating savings for retirement or the kids' college education. As we know, markets historically rebound, and younger investors with time to recover from market corrections have the benefit of dollar cost averaging.
SEE MORE Find Out in 5 Minutes If You Have Enough to Retire
But boomers entering or already in retirement have different needs than all the "Gens" that have come after them: They may not be able to wait around for their depressed accounts to grow again. For boomers, income is the important consideration — income that stays steady and grows over the decades of retirement.
Where to find income
Economic downturns always provide winners along with the many losers, and annuity payment contracts (also called income annuities) — which with rising interest rates have increased the payouts on new contracts — are the current winners. As of August 15, 2022, new purchases of income annuities at certain ages are providing 20% to 50% (depending on the income start age) more than at the beginning of the year, and that could go up even further. They're almost the mirror image of mortgage interest rates, which are also going up.
How much do you think a 20% increase in annuity payments is worth? Just imagine that your starting Social Security benefit you could claim next year went up from $3,000 to $3,600 per month. Would that get your attention
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Print section
Print Rubric:
How America does, and does not, redistribute income
Print Headline:
For richer, for poorer
Print Fly Title:
Redistribution
UK Only Article:
standard article
Issue:
A hated tax but a fair one
Fly Title:
For richer, for poorer
Location:
WASHINGTON, DC
Main image:
20171125_USD001_0.jpg
AMERICANS are not known for their love of income redistribution. Asked to rank, on a scale of one to ten, how important it is for democracies to reduce inequality, they say only six; Europeans say eight. Yet the country is hardly indifferent to who gets which slice of the economic pie. Three in five Americans say that income and wealth should be spread around more. The most potent charge laid against the unpopular Republican tax plan making its way through Congress is that it is a ...
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