How to Create Income from Retirement Savings: Alternatives to Annuities | The Financial Hour

Meta Description: Discover dividend strategies for market downturns and how to avoid running out of money in retirement. Learn about transitioning from saving to spending in retirement with proven strategies.

Transitioning from Saving to Spending in Retirement: Breaking the Autopilot Investing Habit

The latest episode of The Financial Hour tackles a critical issue facing retirees today: how to create income from retirement savings that lasts. Tom Dupree and Mike Johnson explore alternatives to annuities for retirement income while contrasting investment process vs momentum investing approaches. They explain why protecting retirement savings from market volatility becomes essential when transitioning from saving to spending in retirement. With tech stocks sliding and market volatility increasing, the Dupree Financial Group’s approach to dividend-producing assets offers dividend strategies for market downturns that can help you avoid running out of money in retirement.

 Current Market Performance and Retirement Planning Implications

Tom and Mike open with a market overview showing concerning trends for tech-heavy portfolios:

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• NASDAQ down nearly 4% year-to-date
  
• S&P 500 flat year-to-date
  
• Dow Jones up 2.1% year-to-date
  

This divergence highlights the concentration risk many retirees face with tech-heavy index funds. The hosts explain why their clients’ portfolios are outperforming major indices during this market shift.

“We’ve been pounding the table, screaming and hollering about this for the last two years. What we’ve been pounding the table on is not a market call… it’s looking at valuations and the concentration of risk in everybody’s portfolios, retirement portfolios.”

 Moving from 401k to Income-Generating Investments: Two Approaches

Mike explains the fundamental difference between momentum-chasing and value-based approaches when moving from 401k to income-generating investments:

“The investment process for retirees, you have to look at risk and you have to look at where are the returns coming from. Are the returns coming from momentum chasing? You know, the game of hot potato where you’ve got it at this price and you’re hoping somebody buys it for slightly higher. Is that the process or is it actually built on fundamental valuation where you look at an asset and you say, this is what the thing is worth.”

This distinction is crucial for effective retirement transition strategies, as creating inflation-adjusted retirement income becomes more important than chasing growth during market volatility.

 Breaking the Autopilot Investing Habit for Retirees

Tom and Mike discuss how investment inertia can harm retirees. While “set it and forget it” works during accumulation years, breaking the autopilot investing habit becomes crucial for retirees:

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• During accumulation: Market drops allow you to buy more shares with regular contributions
  
• During distribution: Market drops force you to sell more shares to maintain income
  
• SLA (Sequence of Returns Risk): Early retirement market drops can permanently damage portfolio sustainability
  

“You need regular income, but you’re invested in something that doesn’t produce it. That’s the rub.”

This insight explains why protecting retirement savings from market volatility through strategic approaches is essential for long-term security.

 How to Avoid Running Out of Money in Retirement

The hosts highlight how many investors fail to adjust their strategy when transitioning from saving to spending in retirement:

“Autopilot during the savings period has worked. It’s worked really well for a long time. The people that we’re going to be getting calls from pretty soon are those who have stayed on autopilot after retirement or right up to retirement. And they’re now beginning to think, you know, this thing could really diverge.”

This warning points to the need for alternatives to annuities for retirement income that can provide more flexibility and potential growth while maintaining security.

Alternatives to Annuities for Retirement Income: The Transparency Advantage

Tom explains how investment fee transparency provides alternatives to annuities for retirement income that set Dupree Financial Group apart:

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• Complete Transparency – Know exactly which dividend-producing assets you own
  
• No surrender fees – Access your money without penalties for maximum flexibility
  
• Direct ownership – Your investments belong to you, not commingled with others
  
• Clear fee structure – No hidden costs buried in complex products
  

These advantages create portfolio income generation streams that help in protecting retirement savings from market volatility while being more flexible and potentially more beneficial for wealth management over time.

Long-Term Relationships vs. Transaction-Based Advice

The episode explores how compensation structures influence the quality of retirement planning advice:

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• Transaction/commission model incentivizes frequent changes and product sales
  
• Fee-based model aligns advisor success with client success
  
• Relationship-based approach allows for deeper research and personalized strategies
  

Dividend Strategies for Market Downturns: Creating Inflation-Adjusted Retirement Income

Tom and Mike discuss their research-driven investment process for identifying quality dividend-producing assets that can help in creating inflation-adjusted retirement income:

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• Focus on understanding fundamental business operations rather than momentum investing
  
• Identify companies with sustainable dividend growth potential for reliable portfolio income generation
  
• Seek buying opportunities during market downturns to enhance long-term returns
  
• Remain nimble enough to act when opportunities arise to implement dividend strategies for market downturns
  

This approach to how to create income from retirement savings provides a strategic alternative to the passive index investing that dominates many retirement accounts.

Key Strategies for Transitioning from Saving to Spending in Retirement

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• Moving from 401k to income-generating investments – Investment process vs momentum investing becomes critical when transitioning to distribution
  
• How to create income from retirement savings – Dividend-producing assets provide reliable income streams through market cycles
  
• Alternatives to annuities for retirement income – Transparent, directly-owned investments offer flexibility without surrender penalties
  
• Breaking the autopilot investing habit for retirees – Proactive management becomes essential when withdrawals begin
  
• How to avoid running out of money in retirement – Dividend strategies for market downturns provide stability when tech-heavy indices fluctuate
  
• Creating inflation-adjusted retirement income – Focus on companies with growing dividends to maintain purchasing power
  

Ready to Start Creating Income from Your Retirement Savings?

Is your retirement portfolio still following momentum investing principles when it should be focused on income? Transitioning from saving to spending in retirement requires breaking the autopilot investing habit that may have served you well during accumulation years. The team at Dupree Financial Group specializes in creating inflation-adjusted retirement income through dividend strategies can work in market downturns.

To learn how our alternatives to annuities for retirement income could help you avoid running out of money in retirement, call us at 859-233-0400 or visit dupreefinancial.com to schedule your consultation. Let us help you with moving from 401k to income-generating investments that provide security in any market environment.

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This blog post is based on the Tom Dupree Show by Dupree Financial Group. The information provided is for educational purposes only and should not be considered investment advice. Always consult with a qualified financial advisor before making investment decisions.

The post Investment Strategies for Retirees: Why Dividend Income Beats Market Momentum HOUR2 3-01-25 appeared first on Dupree Financial.