Before retirement, everyone wants to have a financial plan that ensures sustainable annual income for lifetime in retirement years. No matter it is for essential living expenses (food, clothing, housing, transportation, medical care, etc), long-term care costs, or entertainment, we need a solid plan to make our money last our lifetime with sustainable purchasing power. The finanicial plan should also tell us how much we can afford to safely spend each year with inflation-adjustment, so that we will not have to spend just the minimum amount to get by, which would improve our quality of life.

However, it is not an easy task for most people to convert retirement assets into sustainable annual income for lifetime. Several big unknowns include:

• We do not know how long we will live (we even typically underestimate our life expectancy).
• We cannot predict what our health conditions will be decades later.
• We even do not know how the stock market, tax rates, and inflation will behave many years later in our retirement.
• We cannot foresee if cognitive decline will prevent us from making sound financial decisions (33% of Americans over age 85 are afflicted with Alzheimer’s disease).

Thus, planning for sustainable lifetime income in retirement is a challenging task. It is better to do it with the help of a qualified professional, and do it early.

Below are the common approaches to convert retirement savings into sustainable annual income for life. Any good approach must be supported by valid data analysis.

• Safe Withdrawal Rates by Yourself
• Monte Carlo Simulation by Qualified Professionals
• Guaranteed Lifetime Income

Doing it right can make a big difference and enable you to have much more money to spend in retirement, compared to doing it in the naive way. If you start with $1 million dollars or more, for a 30-year retirement, a good plan could enable you to have hundreds of thousands of more dollars to spend, than a naive plan.

A good retirement plan not only helps to ensure financial security in retirement, but also lead to peace of mind and a happier life.