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    Covering Essential Expenses in Retirement

    Today’s retirees face unique challenges — including prolonged periods of market uncertainty and longer average lifespans — which make thoughtfully planning for retirement more critical than ever. For most, feeling more confident about retirement comes down to the ability to pay for essential expenses — the predictable and recurring costs of life’s necessities. Some of the most common essential expenses include food, home maintenance costs, mortgage or rent payments, taxes and insurance premiums.

    How can you cover these expenses?

    Since markets will always fluctuate, having a concrete financial strategy that includes guaranteed or stable income sources can help you cover your essential expenses in all market environments. In fact, it’s a good idea to aim to cover 100 percent of your essential expenses with these sources of income during retirement.

    If you’re nearing retirement, you may already have one or more sources of guaranteed or stable income in place, most notably Social Security. You may also have a defined benefit plan through your employer. Yet, no matter how strong these two sources of income may be, they might not be sufficient to cover your essential expenses in retirement. This means that you will likely have to rely on your savings to pay some of your basic living costs.

    There are several financial solutions that offer guaranteed or stable income and can help you cover the gap between what you have in place and what you’ll need, for example:

    •  Annuities — Annuities can generate a reliable stream of income throughout retirement. Annuity contract guarantees are backed by the claims-paying ability of the issuing insurance company. They can provide a stable income for a desired period of time, or for life. Some annuity contracts may also provide principle protection.

    The unique features of annuities offer opportunities for tax deferred future income growth. There are also many different optional features and benefits that may be available for an additional cost with annuities. In return for the benefits they provide, annuities carry a surrender charge and other fees.

    •  Bank deposits — Most savings accounts, Certificates of Deposit (CDs) and other deposit arrangements at a bank offer a set interest rate and return of principal, and are protected by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per account registration. (For more information, visit

    •  U.S. Government Securities — Savings bonds and United States Treasury Securities are backed by the full faith and credit of the U.S. Government. They may pay a stated interest rate, or be purchased at a discount of face value. There are many strategies that can be used to generate income with these instruments. Interest income from Treasury bonds is generally exempt from state and local income taxes, but is subject to federal income taxes.

    Having the financial security you need to enjoy retirement takes planning and hard work. All of these investment choices can provide a regular stream of income over time, so you can count on payments to help you meet the challenges of an uncertain environment. Consider working with a financial professional who can help you find the best financial strategy for you based on your financial situation and goals.

    Brandon Miller, CFP and Joanne Jordan, CFP are financial consultants at Jordan Miller & Associates, A Private Wealth Advisory Practice of Ameriprise Financial Inc. in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals.