Not long ago, many workers could count on an employer pension as the backbone of their retirement. But times have changed. In fact, AstraZeneca Pharmaceuticals announced in 2022 that it would end its $1.3 billion pension plan, affecting nearly 7,000 workers and retirees.
While the company had already closed the plan to new hires years earlier, the move highlights a larger truth: traditional pensions are disappearing. If you want a secure retirement, you’ll need to build multiple income streams instead of relying on a single source.
That’s where thoughtful planning and professional guidance come in.
The Role of a Financial Planner
Creating a solid retirement strategy doesn’t just mean stashing money away. It’s about understanding your personal situation and making intentional choices. A financial planner can help you:
- Define your retirement income and lifestyle goals.
- Assess your current financial picture.
- Identify your risk tolerance.
- Recommend strategies to help you reach those goals.
Even if you’re years away from retirement, the steps you take now can make a big difference later.
Financial Strategies for Diversifying Retirement Income
Here are several ways to strengthen your financial foundation and create reliable income for the future:
Protect Yourself Against Risks
Before you think about investing, make sure your foundation is secure. Adequate life, disability, long-term care, and homeowner’s/liability insurance can help prevent unexpected events from derailing your retirement plan.
Maximize Your 401(k) Contributions
If your employer offers a 401(k) match, take full advantage. Many companies match 50 cents to $1 for every dollar you contribute, up to a certain percentage of your salary (often 3% to 5%). That’s free money you don’t want to leave on the table.
Reduce High-Interest Debt
Carrying debt—especially credit cards or personal loans—erodes your ability to save. Try to eliminate high-interest balances as soon as possible so you can redirect more money into retirement accounts.
Max Out IRA Contributions
You can contribute up to $6,500 annually to an IRA (or $13,000 for married couples). If you’re 50 or older, you can add another $1,000 per year in catch-up contributions. Depending on your income, you may also qualify for tax deductions on traditional IRA contributions—or choose a Roth IRA for tax-free withdrawals in retirement.
Delay Social Security Benefits (If Possible)
Every year you delay taking Social Security beyond your full retirement age increases your benefit by about 8%, up until age 70. Waiting can significantly boost your lifetime income and reduce the chance of being taxed on your benefits.
Consider Annuities for Guaranteed Income
If you don’t have a pension, annuities can help provide a steady stream of guaranteed lifetime income. They aren’t right for everyone, but for many, they can serve as a pension substitute.
Don’t Put Retirement Planning Off
The longer you wait to put these pieces in place, the harder it becomes to reach your goals. By diversifying your income sources, you create flexibility and reduce the risk of running out of money in retirement.
The takeaway is simple:
don’t rely on just one stream of income. A balanced approach — combining savings, investments, Social Security, and possibly annuities — gives you greater security and peace of mind.
Ready to Take the Next Step?
Planning for retirement can feel overwhelming, but you don’t have to do it alone. We’re here to help you review your options, explore strategies, and build a retirement income plan tailored to your goals.
