The single biggest retirement concern facing seniors today is running out of money in retirement.
A recent survey* questioning 1,000 Americans with $50,000 to $250,000 in investable assets—found that 55 percent of respondents were terrified of not having enough money to live out retirement. This beat fears of losing a job (35 percent), public speaking (25 percent), weight gain (24 percent) or going to the dentist (23 percent).
If you are in retirement or still working and saving for retirement, take a few minutes to look at this video to remind you of what has happened in the past and may just happen again… click on the video below to watch it.
This together with other scams and perhaps a few bad choices, have forced retirees back into the workforce oftentimes at minimum wage. Not exactly what I have in mind for my retirement days!
In addition, it is almost impossible to start again, and you may not have the time to accumulate sufficient funds to meet your needs and maintain your living standards during your retirement years. The question is, what price are you prepared to pay for your financial security during retirement?
Of course, the best way to not run out of money, is to have so much of it that this prospect is unlikely, but we will proceed on the basis that most of us are not in this fortunate position!
As you may know by now, we are unashamed proponents of using fixed index annuities as part of your overall retirement solution. The Fixed Index Annuity (FIA) will primarily provide you with three main benefits in one, all of which are not found in any other single financial vehicle.
- Never lose money: With an FIA you will never have your hard earned money at risk, so you never have to be concerned that you will wake up one day and find that your retirement fund is worth significantly less than it was when you started. Your FIA cannot lose value as a result of a fall in the stock market, it will in fact go sideways (no growth) during down years. See video link above.
- Grow and compound your money: The growth of your funds in the fixed index annuity are linked to a market index (usually the S&P 500) and you will share in a portion of these gains. The other portion goes toward the securing of your money – perhaps a small price to pay for your financial security. It is important to know that fixed index annuities are intended to produce higher gains than traditional “safe” investment vehicles such as bank CD’s – while eliminating the risk of investing directly in equities (stocks or stock funds). Ask us about the best of “Three Worlds” chart.
- Insure your income: An option (at a cost) within most FIA’s today is called an “income rider”. This rider, if elected, will grow your “income base” at a fixed rate of return and pay you out during your retirement, at a fixed rate which is disclosed and illustrated upfront. This will provide you with a guaranteed steady flow of income that you cannot outlive.
All of this is known to you before you take out the annuity contract, so you can predict with certainty what your income is going to be and plan accordingly. If it is too little then you have choices such as delaying retirement, supplementing income or cutting expenses to name a few. But at least you have a starting point, and something to plan around. Way better than gambling on a number that may or may not be there for you when you need it.
FIA’s are certainly not the magic bullet (nothing is), or the one and only solution, but they offer, on balance, one of the safest and best options for those who want to face retirement with some degree of certainty and security.
Your financial professional who is knowledgeable and up to date on this information should guide you as to the use of annuities as part of your retirement. We would appreciate the opportunity to assist and help you in this regard toward your individualized retirement solution.
* Bank of America – Merrill Edge biannual report May 27 2014
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