Money Magazine columnist: Focus on "how much income you'll need -- and whether you're on track to get it"

Posted on September 3, 2010

This Labor Day weekend, a tip of the hat goes to Walter Updegrave, the "Ask the Expert" columnist for Money Magazine.  In a recent column on income security during retirement, Updegrave spelled out a crucial financial issue:

"Does it make sense to shoot for a big lump sum? A huge six- or seven-digit target can be intimidating.... Behavioral economists warn of 'wealth illusion,' or the tendency for people to overestimate the sustainable income a large pile of money can generate.  That's why many retirement experts believe, as I do, that you're better off focusing on how much income you'll need -- and whether you're on track to get it. Yes, that's an estimate too, but one you can more easily equate with a lifestyle." (emphasis added)

The same is true for someone facing years or decades of financial uncertainty due to physical injury.  Given fluctuations in the stock and bond market, as well as ongoing economic uncertainty, the structured settlement's benefit of guaranteed tax-free income becomes even more apparent.

For an interesting real-life example of how the tailored payments of a structured settlement allowed a married couple to live in security after the husband's tragic workplace accident, click here for a YouTube video.