Fidelity Retirement Income Planner

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on September 07, 2023

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Overview of Fidelity Investments

Fidelity Investments is a leading financial services firm that specializes in investment management, brokerage services, and comprehensive retirement planning.

It has a rich history that dates back to 1946 and has become one of the world's largest and most diversified financial companies, serving millions of clients and managing trillions of dollars in assets.

It offers a wide range of investment products, retirement accounts, and planning tools to help individuals at every stage of their financial journey.

It also provides tailored guidance and resources through its online platform, phone support, and nationwide branch network.

It helps clients create robust and effective retirement plans by offering various tools and services, such as the Fidelity Retirement Income Planner, which helps individuals estimate their retirement income needs and build a personalized retirement income plan.

What Is a Fidelity Retirement Income Planner?

The Fidelity Retirement Income Planner is a comprehensive online financial tool and service offered by Fidelity Investments to help individuals plan for a financially secure retirement.

It is designed to assist individuals in assessing their retirement goals, evaluating their current financial situation, estimating their retirement income needs, and building a personalized retirement income plan.

The Fidelity Retirement Income Planner provides a user-friendly interface and a wide range of features to help individuals make informed decisions about their retirement savings and investments.

The tool offers insights into investment strategies, asset allocation, tax-efficient planning, and other considerations. It allows users to model different retirement scenarios, such as changing retirement ages, adjusting savings contributions, or exploring alternative investment strategies.

Getting Started With the Fidelity Retirement Income Planner

Creating a Fidelity Account

To access the Fidelity Retirement Income Planner, individuals need to create a Fidelity account. This process involves providing basic personal information, such as name, contact details, and social security number.

Creating an account enables users to securely save their retirement plans, track progress, and receive personalized recommendations based on their financial profile.

Setting Retirement Goals and Objectives

The next crucial step is to define clear retirement goals and objectives. Individuals should carefully consider their desired lifestyle in retirement, including factors such as travel plans, hobbies, and potential healthcare expenses.

Understanding Risk Tolerance

Investing for retirement involves an element of risk. Understanding one's risk tolerance is essential to determine an appropriate investment strategy.

The Fidelity Retirement Income Planner offers questionnaires and assessments to gauge an individual's risk tolerance, considering factors such as time horizon, financial obligations, and emotional comfort with market fluctuations.

Gathering Financial Information

To create an accurate retirement income plan, individuals need to gather their financial information. This includes assessing current retirement savings, investment accounts, and other potential sources of retirement income, such as pensions or rental properties.

Additionally, individuals should review their expenses and budgeting to understand their current cash flow and identify areas for potential savings.

Exploring Retirement Income Options

Retirement income options vary, and it is crucial to explore the available choices. The Fidelity Retirement Income Planner provides valuable information on different retirement income sources, including Social Security benefits, annuities, and retirement account withdrawals.

Understanding the pros and cons of each option allows individuals to make informed decisions regarding their retirement income strategy.

Setting up a Fidelity Retirement Income Planner

Estimating Retirement Income Needs

Estimating retirement income needs is a crucial step in planning for a financially secure retirement. The Fidelity Retirement Income Planner provides valuable tools and resources to assist in this estimation process.

Determining Desired Lifestyle in Retirement

To estimate retirement income needs, individuals must determine their desired lifestyle during retirement. This includes considering factors such as housing, travel, healthcare, hobbies, and other discretionary expenses.

The Fidelity Retirement Income Planner helps individuals break down these lifestyle components and estimate their associated costs.

By aligning retirement income goals with desired lifestyle choices, individuals can better plan for their financial needs in retirement.

Estimating Healthcare Costs

Healthcare expenses are a significant consideration in retirement planning. The Fidelity Retirement Income Planner includes tools to estimate healthcare costs based on an individual's age, current health status, and expected medical needs.

By factoring in potential healthcare expenses, individuals can ensure they have sufficient funds allocated for medical costs, including insurance premiums, medications, and long-term care.

Factoring in Inflation and Longevity

Inflation and longevity are two critical factors that can significantly impact retirement income needs. The Fidelity Retirement Income Planner incorporates inflation estimates to project future expenses accurately.

The tool considers life expectancy based on current age and gender to estimate the length of retirement and the duration of income needed.

By accounting for these factors, individuals can ensure their retirement income plan is robust and can sustain throughout their retirement years.

Assessing Potential Income Gaps

After estimating retirement income needs, it is important to assess potential income gaps. This involves comparing projected retirement income from all sources, including savings, investments, Social Security, and other income streams, with estimated expenses.

The Fidelity Retirement Income Planner analyzes this information and identifies any gaps between income and expenses.

This assessment helps individuals understand if they need to adjust their retirement savings, investment strategies, or retirement age to bridge any potential income shortfalls.

Building a Retirement Income Plan

Building a solid retirement income plan is crucial to ensure financial stability and meet retirement goals. The Fidelity Retirement Income Planner provides valuable guidance and resources to help individuals create a comprehensive plan tailored to their unique needs and circumstances.

Exploring Investment Strategies

The Fidelity Retirement Income Planner offers insights into various investment options and strategies that can help individuals generate income during retirement.

Asset Allocation

Asset allocation is a critical factor in investment strategy. The Fidelity Retirement Income Planner provides guidance on determining an appropriate asset allocation based on an individual's risk tolerance, time horizon, and financial goals.

By diversifying investments across different asset classes, such as stocks, bonds, and cash equivalents, individuals can potentially achieve a balance between growth and stability in their retirement portfolio.

Diversification

Diversification is another important investment strategy to mitigate risk and optimize returns. The Fidelity Retirement Income Planner educates users on the benefits of diversifying their investment holdings across different sectors, geographies, and investment types.

By spreading investments across various assets, individuals can potentially reduce the impact of market volatility and enhance long-term portfolio performance.

Portfolio Rebalancing

Regular portfolio rebalancing is crucial to maintaining an appropriate asset allocation and risk profile. The Fidelity Retirement Income Planner provides tools and recommendations to help individuals periodically rebalance their investment portfolios.

By selling over performing assets and reinvesting in underperforming ones, individuals can ensure their portfolio remains aligned with their desired investment strategy and retirement goals.

Choosing Appropriate Investment Vehicles

Selecting the right investment vehicles is another critical aspect of building a retirement income plan. The Fidelity Retirement Income Planner offers insights into various investment options available to individuals.

Individual Retirement Accounts (IRAs)

IRAs are tax-advantaged retirement accounts that individuals can use to supplement their employer-sponsored retirement plans.

The Fidelity Retirement Income Planner provides information on different types of IRAs, such as Traditional IRAs and Roth IRAs, and helps individuals assess the suitability of these accounts based on their tax situation and retirement goals.

Employer-Sponsored Retirement Plans

Employer-sponsored retirement plans, such as 401(k)s and 403(b)s, are common retirement savings vehicles. The Fidelity Retirement Income Planner assists individuals in understanding the features of these plans, such as contribution limits, employer matching, and investment options.

By optimizing contributions to employer-sponsored plans, individuals can take full advantage of potential tax benefits and maximize their retirement savings.

Annuities and Other Insurance Products

Annuities and insurance products can play a role in generating retirement income.

The Fidelity Retirement Income Planner provides information on different types of annuities, such as immediate annuities and deferred annuities, and helps individuals assess whether these products align with their retirement income goals.

By considering annuities and insurance products, individuals can explore options for guaranteed income streams during retirement.

Using Fidelity Retirement Income Planner Tools

The Fidelity Retirement Income Planner offers a range of tools and features to assist individuals in their retirement planning journey.

Understanding and effectively utilizing these tools can enhance the accuracy and effectiveness of the retirement income planning process.

The Fidelity Retirement Income Planner provides a comprehensive suite of tools designed to help individuals assess their retirement readiness, analyze income projections, and make informed decisions.

These tools include interactive calculators, retirement income estimators, and scenario analysis capabilities.

By exploring and utilizing these tools, individuals can gain valuable insights into their retirement income needs and potential strategies.

Inputting Financial Data

The Fidelity Retirement Income Planner allows individuals to input their financial data to create a personalized retirement income plan.

This includes information on retirement account balances, other sources of income, expenses, and other relevant financial details.

Analyzing Retirement Income Projections

Once the financial data is inputted, the Fidelity Retirement Income Planner generates retirement income projections.

These projections provide individuals with estimates of their potential retirement income from various sources, such as investments, Social Security, and pensions.

Exploring Different Scenarios and Adjustments

The Fidelity Retirement Income Planner allows individuals to explore different scenarios and make adjustments to their retirement income plan.

Users can experiment with variables such as retirement age, savings contributions, investment returns, and retirement lifestyle choices to understand the impact on their retirement income projections.

Steps in Using the Fidelity Retirement Income Planner

Reviewing and Monitoring the Retirement Plan

Creating a retirement income plan is not a one-time event. It requires regular review and monitoring to ensure its effectiveness and make necessary adjustments along the way.

The Fidelity Retirement Income Planner provides guidance on reviewing and monitoring the retirement plan.

Regularly Reviewing and Updating the Plan

Individuals should regularly review and update their retirement income plan to reflect changes in their financial situation, goals, and market conditions.

The Fidelity Retirement Income Planner encourages users to revisit their plan at least annually or whenever there are significant life events or financial changes.

By regularly reviewing and updating the plan, individuals can ensure its relevance and effectiveness in achieving their retirement goals.

Assessing Progress Towards Retirement Goals

The Fidelity Retirement Income Planner enables individuals to assess their progress towards their retirement goals.

Users can track their savings and investment performance, compare it with their initial projections, and evaluate whether they are on track to meet their desired retirement income.

Making Necessary Adjustments

As individuals progress towards retirement, it is important to make necessary adjustments to their retirement income plan.

This may involve increasing savings contributions, rebalancing investment portfolios, or reassessing retirement age and lifestyle choices.

The Fidelity Retirement Income Planner offers guidance on making these adjustments and provides insights into the potential impact on retirement income projections.

By adapting the plan as needed, individuals can navigate changing circumstances and stay on course towards their retirement goals.

Conclusion

The Fidelity Retirement Income Planner, a service provided by the leading financial firm Fidelity Investments, is an innovative tool designed to guide individuals in their journey to a financially secure retirement.

This comprehensive tool allows users to input financial data, assess retirement readiness, analyze income projections, and make necessary adjustments, creating a personalized retirement income plan.

By offering interactive calculators, retirement income estimators, and scenario analysis capabilities, this planner helps individuals evaluate their retirement goals, risk tolerance, and explore various investment strategies.

Regular review and adjustments to the plan are critical to ensure alignment with financial situations, goals, and market conditions.

With its emphasis on user-friendly interfaces, accurate projections, and adaptable plans, the Fidelity Retirement Income Planner emerges as a trusted companion for those planning for retirement.

Fidelity Retirement Income Planner FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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