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A sturdy framework is one that is strong enough to support your retirement income plan while leaving room for adjustments as your needs change. A retirement income strategy that addresses the need for growth potential, access to liquid assets, and predictable income can strengthen your plan and help you feel more confident about your future.

The key is to find the right balance between the three building blocks for a sound retirement so they can help you mitigate the retirement risks.

  • Longevity: Predictable income for life. This means the foundation of your retirement plan. It’s income that isn’t exposed to the market's ups and downs and is guaranteed to be there when you need it. There are three key sources for this kind of income: Social Security, a defined benefit plan (if you are lucky enough to have one), and the lifetime income options provided by many annuities.

  • Inflation: Assets set aside for the pursuit of growth offer the best possibility of keeping pace with inflation, although the potential for growth also entails market risk. Examples include stocks, bonds, and mutual funds.

  • Sequence of Returns: The key to limiting the impact of sequence of returns is to not withdraw funds during market downturns and give your portfolio time to recover. Unfortunately, when you need income from your investments on an annual basis, this is not a viable option. The solution is to hold cash in reserve so when you are faced with negative market returns, you can use this reserve for your income needs. This means liquid assets that can be accessed and are also readily available for emergencies. Sources of liquid assets include money market accounts and simple savings accounts.

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