As you look ahead to retirement in Wausau WI, there are opportunities to secure income beyond Social Security.

An Investopedia article, 4 Sources of Income for Your Retirement has some excellent information.

Immediate Annuities*

Purchasing an immediate annuity is a straightforward way to turn a lump sum into a steady, guaranteed income stream that lasts. Many retirees use the savings accumulated during their working years to buy an immediate annuity because it provides predictable payments that are immune to market fluctuations and interest rate changes.

However, this stability comes with trade-offs. Immediate annuities don’t adjust for inflation, meaning their purchasing power declines over time.

Strategic Systematic Withdrawals

Another key strategy to consider is systematic withdrawals — a structured approach to managing retirement income.

Even if you have millions saved, withdrawing everything at once and stashing it away isn’t a smart or secure way to maximize your income. Instead, withdrawing only what you need while allowing the rest of your assets to continue growing is the strategic approach.

A systematic withdrawal strategy involves determining your cash flow needs and withdrawing only that amount at regular intervals. While taking out a fixed sum each month may seem systematic, true strategy requires aligning withdrawals with your actual financial needs to avoid depleting funds too quickly.

Most retirees gradually liquidate their assets over time, with mutual funds and stocks in 401(k) plans often serving as primary sources of income. However, other assets — like bonds, bank accounts, and real estate — should also be considered in a well-balanced drawdown strategy.

Understanding and implementing a strategic withdrawal plan can help retirees balance income needs while preserving their financial security for the long haul.

Laddered Bonds**

Now, let’s explore bond ladders, a strategy that involves purchasing multiple bonds with staggered maturity dates. This approach provides consistent returns, minimizes risk, and protects against call risk, since bonds mature at different times rather than all at once.

Bonds typically pay interest twice a year, meaning a portfolio of six bonds can generate steady monthly cash flow. Since the interest rate is locked in at purchase, payments remain predictable and stable over time.

As each bond matures, a new one is purchased with a later maturity date, effectively extending the ladder. This ongoing cycle ensures continued income and reinvestment opportunities. Additionally, bond ladders offer flexibility because investors can choose from a wide range of bonds with varying credit qualities to tailor the portfolio to their needs.

Laddered CDs***

Building a certificate of deposit — or CD — ladder follows the same strategy as constructing a bond ladder, with CDs purchased at staggered maturity dates to provide a structured flow of income.

For example, one CD might mature in six months, another in one year, and another in 18 months. As each CD matures, a new one is purchased with a later maturity date, ensuring a continuous cycle of reinvestment while maintaining liquidity.

This approach is more conservative than a bond ladder since CDs are FDIC-insured, making them a lower-risk option. While CD ladders are typically used for short-term income needs, they can also support longer-term financial goals if interest rates are favorable.

Unlike bonds, CD interest is only paid at maturity, so it's essential to structure the ladder to align with your income needs. Additionally, some CDs have an automatic reinvestment feature, which could prevent you from accessing funds as planned.

SOURCES

https://www.investopedia.com/articles/retirement/08/retirement-income-stream.asp

Disclosure: All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.

*Annuities are designed to be long-term investments and frequently involve charges such as administrative fees, annual contract fees, mortality & risk expense charges, and surrender charges. Early withdrawals may impact annuity cash values and death benefits. Taxes are payable upon withdrawal of funds. An additional 10% IRS penalty may apply to withdrawals prior to age 59 ½. Annuities are not guaranteed by FDIC or any other governmental agency and are not deposits or other obligations of or guaranteed or endorsed by any bank or savings association. Guarantees are based on the claims paying ability of the issuing insurance company.
**Laddered bonds strategy offers predictable cash flow and reinvestment opportunities, it does not eliminate all risks. Bond prices can fluctuate due to interest rate changes, and there is a risk of credit defaults from the issuers. Additionally, while laddering can reduce the impact of rising rates, it does not protect against all market or economic risks. As with any investment, it is important to carefully consider your financial situation and investment goals before proceeding.
***Certificates of Deposit (CDs) come with some investment risks. Interest rate risk arises if rates increase after purchasing a CD, as your fixed return may become less favorable compared to newly issued CDs. Liquidity risk is another concern, as early withdrawal can result in penalties that reduce your principal. There's also credit risk, as the issuing bank could face financial difficulties, although FDIC insurance generally protects up to $250,000 per depositor. Reinvestment risk exists when a CD matures and the interest rate for reinvestment may be lower than the original rate, affecting your returns. Lastly, inflation risk can erode the purchasing power of your returns if inflation outpaces the CD's interest rate. It’s important to understand these risks and assess your financial goals before investing in a CD.