Before I answer that question, let’s take a minute and reflect on what it took to get to this point in your life assuming you’re already retired or about to be retired. If you’re like most people, you’ve worked hard over the last 40+ years to be able to retire. You competed to get that first job, worked hard to advance in your career, having to learn new skills and technologies along the way to keep up. You started and raised a family with all the responsibilities that go along with that. You not only saved for retirement but also for braces, college for the kids, weddings and thousands of other things to provide for your family. So you finally made it and now what you want most is to be able to enjoy yourself and not have to worry about where the money is going to come from to fund this new lifestyle.
A generation ago, you probably would have had a pension, social security and savings to live on. Unfortunately, not many of today’s retirees have a company pension. Most are relying on their 401K or IRAs and social security to provide income. The problem is you haven’t achieved what you want most from retirement; you still have to worry about making the money last! You still have to manage, or pay someone to manage, the money in the 401K and hope that the market doesn’t keep you up at night. I’ve been helping my clients with retirement planning for over 20 years and one thing hasn’t changed, they all want ‘financial peace of mind’.
To help my clients take the worry out of retirement planning, I’ve developed a simple strategy to provide guaranteed lifetime income to cover their basic needs such as housing, food, utilities and medical expenses. In a worst case scenario where the stock market is down or flat for long periods of time, wouldn’t it be nice to not have to worry about where the money is coming from to cover your basic needs?
The first thing you need to do is make an honest accounting of what you spend monthly to cover your expenses. Once you have that number, you can determine how much needs to be set aside in guaranteed products to generate the income you need. Annuities are a great way to meet that goal, consider them your own personal pension plan, money you can never outlive that is not exposed to market risk. Annuities come in many shapes and sizes, one size doesn’t fit all. For example, if you’re 5 or more years from retirement you would look at one with strong features for accumulation whereas if you’re looking for immediate income you would want one with the most competitive payout rates. Of course inflation has to be factored into any comprehensive plan, but I’ll save that for a separate article.
To learn more from this annuity professional, click here (John P. Grimes).
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