Written By: Robert Zimmerman | H&R Advisory Service, LLC
Were you there in 1987 when the market dropped over 20% in one day? Were you among those who watched awestruck while the stock prices streamed across the screen?
Did you participate in 2007 when the market dropped over 50% over a period of months?
Many people are still frightened by the idea of going back into the investment scene and are willing to accept the low interest rates offered by government bonds or bank accounts – even though they are guaranteed losers when you factor in inflation. It is no wonder that you are fearful.
And yet, there is a ready made solution available if you are willing to open your mind and pay attention. You need only to look for someone whose account actually made money during the last crash. There is a whole class of such people you can find. They are called ‘annuity holders’.
Yes, they are the very people regarded as ‘stupid’ or ‘uninformed’ by many financial commentators. The same experts recommended that you simply use index funds as long term solutions to money management. If you are one who followed that advice, and had you money in such funds in May of 2007, five years later your account had still not returned to its former level.
If you are a few years away from retirement and intend to use your savings to provide income for living, it is not necessary to guess how valuable your account will be when you retire. By being open to using insurance company guarantees, you can know exactly how much income you can count on when you decide to retire.
Also, if you want, you can set it up so that your account will last as long as you live, and you can ignore those who tell you that you must only take 4% from the account if you want to make it last as long as you do.
There are some companies that will tell you that if you only take 6% from your account as a 70 year old person, you can be assured that your money will come to you for as long as you live. That means you can stop worrying and have a 50% income increase over the standard advice.
Bear in mind, we are talking about contractual guarantees, and the figures we use are ‘minimums’. In other words, they can be better, but can never be worse.
If the purpose to financial planning is to provide ‘peace of mind’, you may wish to find a planner who is familiar with insurance contracts.
About Robert Zimmerman: Provides asset management services for those seeking safe money alternatives, tax saving ideas, and legacy building choices, including charitable gifting. For any questions, he can be reached at 248-952-5882.
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