Despite all the crises confronting America, one stands out very prominently… the fear of running out of income in retirement or, simply, outliving your assets. It is a significant dilemma confronting most of the 62 million Americans aged 65 and over. Adding to the crisis is the fact that over 4 million Americans are turning age 65 this year and every year through 2027.
This is known as the “silver tsunami”, the largest surge of retirement-age Americans in history!
Compounding this crisis is the fact that most retiring, and already retired, have simply not saved enough during their working years, their ‘accumulation years’. There are a variety of reasons why that is the case; nevertheless, it does indeed create a significant problem for those who are going to experience longevity going forward with limited assets. Furthermore, as we have more recently experienced, a very stubborn, lingering inflation, the result of poor economic policy, that has raised the costs of virtually all goods and services… food, fuel, building costs, rents, increasing taxes, etc. and, as we know, once costs increase, they are not likely to decrease going forward even if inflation is ‘tamed’ at some point.
Indeed, and additionally, the inflation rate touted by the government omits food, fuel, and several other factors; the real rate of inflation is CPIU, taking into account, everything that we encounter in our daily lives. As former President Reagan stated,
“We don’t have inflation because the people are living too well, we have inflation because the government is living too well.” Ronald Reagan
Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hitman. Strong statements from our very strong former president.
What used to exist some years ago was a three-legged financial stool consisting of social security, pension, and savings, which was ‘balanced’, if you will, and provided for the retirement financial security of most retirees. However, the pension, for most, has now been eliminated and how can one find ‘balance’ on a two-legged stool?
So, what can retired and retiring Americans do to mitigate these retirement risks and concerns as noted above…longevity, inflation, increasing taxes and health care costs, and, for most, the lack of a pension, a guaranteed income for life. Well, the need exists to create that pension and provide to each a guaranteed, never diminishing lifetime income [and inflation-adjusted as well if desired] and, if married, ensure that the income continues to the surviving spouse to help bridge the ‘survivor income gap’ that almost always affects the surviving spouse.
Additionally, because of all the volatility that exists and economic insecurity experienced by us all, it is suggested by many advisors that a retiree take no more than 3-4% per year as an income withdrawal from accumulated retirement assets, and the retiree still runs the risk of running out of assets and thus, income; especially as most retirement funds are still ‘in the market’ with all the attendant risks and volatility that the market provides.
3 Ways to Retire
Well, I do believe that the first part of this narrative has captured the causes and concerns confronting the tens of millions of Americans already and about to be retired. Hence, the retirement dilemma that confronts most of our mature, senior citizens. Also, to be recognized is that there are simply three ways to retire or three options available… the bank’s way, the Wall Street way, or the insurance and fixed annuity way
1. The Bank’s Way
Only recently have bank interest rates increased and one cannot depend on fluctuating interest rates over an extended period for increasing income withdrawal needs and there is NO guarantee of continuing income.
2. Wall Street Way
Over time, the market does perform and you can depend upon it during your younger accumulation years, even with losses and market downturns and all the risks you assume because you had time on your side… to make up those losses and, most importantly, you did not have to take an income yet from those assets.
Now, you are about to retire or already retired and experiencing your distribution years.
Can you really continue to assume all those risks and future market declines at a time during which you will depend upon those assets for the rest of your life…it may be a recipe for running out of money and assets.
3. Insurance and Fixed Annuity Way
In particular, the Fixed Index Annuity (FIA) has been developed in more recent years and it has evolved to address ALL
the aforementioned concerns. It is the financial vehicle/program into which tens of billions of corporate and individual retirement dollars are being deposited each year. Indeed, the FIA is the cornerstone of my practice by which I can provide financial security to my clients and contractually guarantee that they will never, ever run out of income without giving up the asset to do so. We are creating that pension income that everyone requires.
There is no other program or financial vehicle that can perform all these tasks as I continuously state on my syndicated weekly financial radio show heard in eastern MA and SWFL from the Port Charlotte area. The FIA guarantees principle and creates growth by being ‘linked’ to the market via a variety of index offerings one selects and then, that growth is locked in at the end of each crediting period and when the market drops in value, your FIA account holds steady, securing the entire account.
And then, when desired, you can turn on the guaranteed, never-diminishing lifetime ‘income faucet’ and have your income flow, even inflation-adjusted income, for the rest of your life.
Remember from earlier in this narrative, the suggested 3-4% withdrawal rate for income and no guarantees?
Well, with the FIA, and depending upon age when income is selected, your income withdrawal rate is between 6-9% or more per year AND contractually guaranteed for life. What this means also is that we can leverage the assets for retirees by maximizing the income generated and increasing guaranteed retirement income by 200-300% for many people. This unique FIA vehicle can help make up for the lack of adequate retirement savings of most Americans.
Additionally, there are many other benefits included in FIA programs that can increase or provide a bonus added to the deposit to enhance the account value, up to a 45% increase in death benefit account value for legacy/death benefit purposes and with no annual fees whatsoever.
Time herein limits any further exploration of the fixed index annuity and the very many benefits and guarantees that are provided. This program is, indeed, The SWAN portfolio that can and will allow one to Sleep Well at Night in retirement.
Also to note, that the FIA is well suited for those who have accumulated more significant assets and do not necessarily need income, but, are concerned about not losing asset value going forward. The FIA, then, can serve well to preserve and grow those assets and assure their preservation and growth for legacy purposes.
Yes, it does sound too good to be true. It IS indeed too good and it IS true! Upon retiring or in retirement, one should explore with the appropriate professional how this magnificent program can provide the full measure of financial security that most seek in retirement.
In the words of one of our most endearing sci-fi characters, and one of my favorites, Mr. Spock, the FIA will indeed, allow you to…” live long and prosper.”