Create your own personal pension? It’s possible

(BPT) - Retirement planning has certainly changed a lot over the years, hasn’t it? First came pensions, or defined benefit plans, with their guaranteed income for life. After that it was 401(k)s. These plans focused on growing wealth from the stock and bond markets. Your pension and 401(k) were meant to work together but now pensions are disappearing and many people are left with just their 401(k) plan.

Your 401(k) is an important piece of your retirement savings but it was never intended to be your sole retirement solution. Instead, your 401(k) was meant to provide additional retirement savings that worked with your pension, savings and other income sources to paint a full retirement picture. But now for many people the pensions are gone and while you have other savings avenues – what can you do to replace this lost retirement income?

One option could be a deferred income annuity (DIA). A DIA allows you to set up a guaranteed income stream beginning later in your life. With a DIA it’s important to remember that the guaranteed income is based on the strength and claims paying ability of your financial institution so it’s important to choose the right partner. DIA’s are traditionally funded with a lump sum payment up front and the contract promises to pay you a lifetime income stream starting with a date of your choice.

For example, let’s say you purchased a DIA with a $50,000 lump sum. That money will then be held by your financial institution for a defined period, according to the contract, where it will grow with interest. After a specified amount of time has passed, you can start receiving payments. This guaranteed stream of income can then be used to supplement additional retirement savings and help you fill a void in your retirement portfolio.

A DIA is one example of the many options that are available when it comes to retirement strategies and that’s good news for any investor seeking retirement income. With traditional pensions disappearing from the landscape, there are still plenty of options that let you design personal solutions for your own retirement. The key is knowing your options and working with a financial professional who can help guide you toward a stable retirement, that way you’ll be ready for any changes that happen in your retirement planning until it’s finally time for you to enjoy the fruits of all that hard work and smart saving.