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How to Retire Successfully in a Constantly Evolving World

Joshua Samander

Our world is changing faster than it ever has before, giving the middle American retiree tremendous challenges in retirement income planning.

With this change comes volatility in the markets, meaning retirement accounts and investments are subject to major losses that are out of their control.

But market volatility isn’t the issue within itself. 

When we dive deeper, we realize that markets have always risen over time — the key word here is time. Retirees simply don’t have the time to wait for their accounts to recover. When retirees don’t have a proper plan in place, they can dig themselves into a deep hole.

Another key factor in a retiree investment strategy is the fact that they have to take distributions from this account to sustain their quality of life after they quit working and lose their income from their job. When you are taking distributions from your accounts, the compound effect works negatively just as it works as you are saving money.

For example, if the market is down 20%-30%, you might have to make 40% just to get back even. Now throw in the variable of withdrawing from your account and it basically makes retiring with a traditional 60/40 stock/bond portfolio nearly impossible to do with certainty.

If you utilize the 4% rule — taking 4% from a traditional stock/bond portfolio — you will play a Russian roulette in down markets, forcing you to adjust your income. In bull markets, you may be hesitant on how much you can withdraw safely because you’re worried about future volatility.

The only thing certain is uncertainty. Every time we have a market crash, it’s not only the big money guys who lose money. Middle American retirees are left holding the bag. The Wall Street game is not one you want to play if you are trying to develop sustainable retirement income.  

To help offset market volatility, we have found utilizing fixed index annuities and guaranteed income strategies are great products. These strategies transfer the risk from the retiree to the insurance company. The insurance company provides the client guarantees and protection from volatile markets while maintaining a nice potential to grow their assets.  

Many of the programs available provide clients some growth opportunities while side-stepping market risk. This type of performance in a protected money vehicle cannot be ignored. Instead of having to tell our clients it’s just a paper loss and hoping the market will recover, our clients do not have to hope. They have guarantees in place that no matter what market conditions we face moving forward, they are protected.

Once you have your income and nest egg protected, you may be able to get even more aggressive with your other holdings. You can take additional risk and potentially grow your other assets even faster because you have your baseline for retirement secured.

You can travel, start that new business, whatever it is you want to do, because you know exactly how much income you will have coming in for the rest of your life guaranteed.

Insurance companies are not flashy, but they stand the test of time — index annuity sales are breaking records topping almost $100 billion in 2019. The reason for their strength is their business model. They have billions of dollars of life insurance premiums coming every month, where most people never use it because they outlive the coverage, and guaranteed income annuities that are never fully utilized because of early death.

Ultimately, in order to guarantee a successful retirement, an annuity is likely to be part of the overall financial plan. They provide key benefits that directly address the risk retirees face.  

Not all annuities are created equally, nor will each of them reach your personal goals. This is why it’s important to work with a seasoned professional who focuses on retirement income planning. When deciding what annuity to purchase, consider these factors.

Your objectives

We’ve seen most of our clients have two objectives when purchasing an annuity: growth without risk or guaranteed income for life. If you strictly are looking to grow your assets safely, you would choose a good company with good rates and growth indices without an income rider. If you want income, you would want to go with the most competitive and highest guaranteed income you could get.

Strength and credibility

No matter how nice the house looks on the outside, if the foundation is weak, it’s worthless. It’s the same with insurance companies. You only want to go with the strongest, A+ rated, financially sound companies in the industry. Most of the companies we represent are A+ rated and have been around for a century or more. This type of longevity will give you confidence that the company is going to stand by what it says.

The world of annuities is vast and can be confusing, but it doesn’t have to be! Working with a seasoned professional can help you discover what annuity is right for your retirement goals. At Samander Financial, we pride ourselves on staying current in the industry and offer our clients the most competitive rates possible. As independent brokers, it gives us tremendous flexibility to be able to broker through the best companies for our clients.

Visit our website to schedule a meeting today!

Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Investment advisory services offered through Optivise Advisory Services, LLC, a Registered Investment Advisor. Insurance and annuities offered through Joshua Samander. MS Insurance License #10508445.

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About the Author:

Joshua A. Samander is a financial professional located in Brandon, Mississippi, where he resides with his beautiful wife, Reagan, and two sons. He has a strong passion for helping families find added peace of mind in their financial situations. Along with his grandfather, Larry Thornton, Josh operates a family practice that has served Mississippians for almost 40 years. They also hold workshops across the state, providing educational content to the public on a variety of retirement topics. It has been their primary goal to help families make the best decisions they can and live more enjoyable retirements.

 

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