Rich and Conservative Investors’ Retirement Secrets

Brian Carrozzi - October 29, 2013

Everyone wants to know the secret of retirement.  How does one retire in today’s turbulent market environment with income for life?  What are the best ways for retirees and those soon to retire, to maximize their savings?  Learn about the alternatives that are available not just for asset protection, but also for attaining the guaranteed lifetime income – regardless of what happens with interest rates or the stock market.

The Changing Tide of Retirement

Today, more than ever before, accumulating assets for retirement – as well as converting those assets to income – is primarily the responsibility of the individual. Lifelong company pension plans where one’s post-employment income amount and duration were already known in advance, no longer exist for the vast majority.

In fact, fewer than 20 companies in the Fortune 100 still even offer defined benefit plans – and many of the firms that do still offer such retirement plans state that the accounts are vastly underfunded.

While many consumers do a good job of accumulating long-term savings in employer sponsored retirement plans such as 401(k)s or related types of accounts, the real issue lies in turning these funds into a livable amount of lifetime income.

Adding even more to the retirement income challenges is the large amount of expected withdrawals from 401(k) plans and other market-related savings vehicles. With this in mind, even the investments that were once thought necessary to beat inflation will likely scare many people with their heightened volatility.

Adding to this concern is increased life expectancy.  Today, many individuals can expect to spend 20, 30, or more years in retirement – living without an employer’s paycheck. For some, this represents a time period that will last longer than the total time that they spent earning wages and investing. So, where exactly will the needed funds come from? 

How to Establish Guaranteed Income for Life – Guaranteed

Despite the recent economic recession, there is good news on the retirement income front.  There are more safe and secure investment alternatives in reach than you may realize.

Social Security

One place many retirees will receive income from is Social Security.  While Social Security has been an income staple of sorts for retirees in the past, the fact remains that this income was never intended to fully replace one’s pre-retirement wages.

In 2013, the average monthly income that is received via Social Security is under $1,500.  With the rising cost of goods and services, along with the substantially longer number of years spent in retirement, this amount won’t take most retirees very far – if it is even received at all.

Over the past several years, concern about the stability of the Social Security program has been answered with longer waiting periods for the receipt of full benefits, as well as the possibility of lowering benefits overall. With this in mind, the receipt of Social Security income in retirement should not be relied upon – especially as one’s primary source.

Personal Pension Plans & Fixed Annuities

With the vast uncertainty of company pension plans and the lasting effects of Social Security income, today’s retiree must take control of their own retirement needs in ensuring that they will have enough income in retirement. In doing so, many are looking to “personal pension plans.”

One option is fixed annuities for providing retirement income. The fixed annuity has been used for many years by retirees in order to produce a guaranteed income stream for a determined amount of time. This time frame may be for a specific number of years – or alternatively choose to receive income from the annuity for the remainder of his or her life, regardless of how long that may be. In addition to providing a regular stream of income, fixed annuities also offer safety of principal to their owners. Fixed annuities provide safety from the volatile market.  Fixed annuity holders continue to earn on their allocations, without risk of losing their principal or earnings – a feature that applies to very few other types of financial vehicles that are available.

 

Attaining and Maintaining a Financially Stress Free Retirement

Here is the secret… regardless of how the economy may fluctuate, retirees who have fixed index annuities have enjoyed interest earnings that are typically a couple of percentage points higher than bank CDs. Yes bank CDs do provide a similar type of safety advantage, but they do not offer their holders a lifetime guaranteed income like annuities do.

Along with this, because fixed index annuities offer tax deferred growth of their funds, money that would otherwise be taxed can grow substantially more over time than dollars that are placed in a taxable account.

In addition to offering an income that can’t be outlived, today’s fixed annuities are also providing even more optional benefits such as inflation protection and flexibility in payment amounts. For example, in many cases, fixed index annuity holders can have their regular income increased by 1%, 2%, or even 5% per year in order to keep up with inflation.

This can be extremely advantageous – especially for those who may spend more money in their later years on costly health care, medications, and other types of long term expenses that rise with inflation.

Having more flexibility in payments can also be a benefit. This can be helpful for those annuity holders who may want more income initially while waiting for Social Security or other retirement income streams to begin.

In summary, retirement income planning can be an intimidating and overwhelming process. In the face of volatile markets, dwindling Social Security, and overall financial uncertainty, many retirees and those who are nearing this life stage fear that they will not be able to attain a stable and steady retirement income.  The good news is there is a solution; fixed index annuities can provide the answer that many are looking for – the safety of principal, a guaranteed amount of growth, and a steady and stable income that literally cannot be outlived.

Disclaimer: Annuities are not for everyone. Please seek professional advice regarding tax liability and investing options based on your personal situation.

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