If you are one of the fortunate few who have a defined benefit retirement plan, you have more predictability in your retirement income than most. You can calculate your combined pension benefits and any Social Security benefits that you have earned and have a clear idea of your annual income throughout retirement – assuming you aren’t tempted to take your pension as a lump sum and head straight to Las Vegas.
With a defined contribution plan such as a 401(k) – or worse, no plan at all – the only certain income stream is Social Security. (We’ll defer arguments about the long-term health of Social Security for another time.) It’s up to you to balance out your sources of income and construct your nest egg in a way that provides a steady, more predictable income – typically around 4% of your overall nest egg per year.
Here are a few approaches to help you reach that goal.
1. Purchase a Fixed-Income Annuity – You give funds to an insurance co…