Retirement income planning can be exciting but a daunting journey as you plan for your financial future. Annuity laddering is a simple concept that can be easily understood and put into action effectively. Quite simply, it involves breaking up one significant investment into smaller, staggered parts that provide income and flexibility, reducing reinvestment risk, and creating built-in checkpoints along your retirement journey.
Every successful laddering strategy starts with your timeline to map out three basic phases:
- Short-term needs
- Mid-term stability
- Long-term security
With future health care costs becoming a concern, it may be wise to design the initial ladder rungs with greater liquidity and build in long-term growth through the later stages. And be sure and schedule built-in review times with your agent to discuss and decide when you should start taking an income or defer again. You have control over your timeline and scheduled reviews create touchpoints to revisit your financial strategy.
The best part about staggered income activation or annuitization is that it is often described as a “retirement pay raise plan.” This helps to combat inflation without relying on Social Security COLA (Cost of Living Adjustment) riders. When new rungs of the ladder kick in – such as at ages 70, 75 and 80 – those added income streams can act like pay raises precisely when you need them.
Laddering is about structuring income to match real life — income that starts when needed, grows with flexibility, and gives the confidence to adjust, adapt and stay on track. It’s a strategy that provides long-term financial security and peace of mind. If you’d like to discuss your retirement options, please contact our office and one of our retirement specialists will be glad to assist you.