If you are like most baby boomers, you have worked your entire adult life putting hard-earned dollars in the company 401k, maybe some in a CD or a Roth IRA, and now you are within striking distance of retirement. You have seen Wall Street’s large gains and large falls and you are trying to figure out how to time the market for a stable retirement income while wondering how to not outlive the money you have worked so hard to accumulate.
The two questions you are probably asking yourself are:
- How much can I take out to live on?
- How do I protect the assets that I have so that when the market has a down cycle, I’m not forced to take more risks with my money to make up those losses?
An annuity product can often fill that need.
The beauty of a fixed indexed annuity is that you reap a portion of the gains from a particular index. For example, some products link to the S&P 500, DIJA, The Russell, or The FTSE while others link to interest rate indexes and commodities. The trade off for not getting the entire gain from an index is that you never experience the downside of the market, your gains become principal, and your principal is always guaranteed.
What has become very popular for people looking to create a dependable lifetime income are indexed annuities that offer a guaranteed lifetime withdrawal benefit (GLWB). These products offer the potential for your savings to grow due to indexed gains. So, if the market does well, then so do you! And when the market has a correction, the worst you can do is receive a zero gain. You can never underestimate the power of never having to make up losses. For example, if you had $100,000 in the market and the market went down 30%, you would then have $70,000. To recoup your loss, it would take a 43% gain just to get back to even, and who knows how long would that take, especially if you taking income at the same time!
If stable income is what your goal is, an annuity with an optional guaranteed lifetime withdrawal benefit (GLWB) maybe just what you’re looking for; it grows regardless if Wall Street goes up or down.
There are a variety of retirement income options available. People who feel most confident in their retirement are the ones who are working with a professional advisor. The stress about outliving their retirement assets are the concerns many advisors hear about the most.
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