Finding Balance in Your Retirement Savings Plan

If you are participating in 401k, 403b, IRA and similar qualified and non-qualified retirement savings accounts, putting all your retirement savings into stocks/equities can be very tempting. After all, stocks have the potential for much greater gains than bonds or cash, especially when cash positions offer such low-interest rates.  In fact, if in a ‘secure’ cash position, you are actually ‘losing money safely ‘ given the eroding effects of inflation on the actual value of your money.

Last year, the S&P 500 index returned 32% for those fully participating in that index. That is certainly quite a return for being ‘fully invested.’  However, anyone keeping all of their portfolio in the market also requires the willpower to hold steady when the market suffers a correction [a normal occurrence in a market cycle] and stock/equity holdings can and do fall suddenly and often. A most recent example is 2008 when the S&P 500 lost 37% and most 401k, IRA and like accounts plunged in value as well. This normal market volatility was not comfortable for any participant. However, if you are younger and in your ‘accumulation phase’ of life, you have time on your side and can wait and weather the ride towards market recovery. If, however, you are older and approaching the ‘preservation/distribution’ phase, you do not have time to wait for a recovery.

After 2008, many, particularly those approaching retirement, sold or reallocated their diminished holdings into ‘safer accounts’ after much heartache and loss and missed the market run up that ensued to the present.  Certainly, a more balanced mix of stocks and bonds would have softened the blow of a severe market decline, but would still not have preserved account value. Those savers considered more conservative can also suffer by not owning any stocks or equities. They avoid any market volatility and loss potential but they do not participate in the growth potential that equities provide.  So, quite a dilemma exists, particularly for the older retirement saver who needs the potential of stock market growth, yet he/she cannot afford and stomach any account value losses so close to retirement.

There is also another concern here not recognized by most.  Since the demise of the traditional defined benefit pension plan, the responsibility of providing a pension now rests with the individual investor or future retiree. These 401k, IRA, and like accounts are simply retirement savings plans…They must be transformed/turned into pension plans with the guarantee of lifetime income and survivor payments [if married] as well as inflation adjusted income payments. If not converted into such a pension, most fear that they will run out of income during their lifetime. In fact, during a recent interview, Steve Forbes, renowned publisher of Forbes magazine, forecast that ‘millions of retirees’ will run out of income during their retirement.  I, and many others, have stated the same for years since most have not saved enough as they approach retirement and most have not converted their retirement assets into a pension and don’t know how to do so in order to maximize their assets.

So, how does one find balance, safety, security and financial security in retirement? According to entrepreneur and motivational speaker Tony Robbins, who has helped and inspired millions to enhance their personal performance, the answer to enhanced financial performance, balance and financial security in retirement is the Fixed Index Annuity as he highlights in his new book “Money: Master the Game’. The Fixed Index Annuity[FIA] is a guaranteed contract offered by a highly rated insurance company. Indeed, this FIA platform/strategy has been the foundation of financial security planning for my clients for many years now and is the basis for my SWAN portfolio strategy…allowing people to Sleep Well at Night.

In short, the FIA strategy, which can fund a 401k, IRA and like accounts, provides:

  • 100% principal protection
  • Locked-in market linked index gains
  • Total account protection from market decline
  • Tax deferred growth until income withdrawals begin
  • Guaranteed lifetime pension income and to survivor
  • Inflation adjusted income to CPIU, if desired

As Tony Robbins continues to state “These products have been around for almost 20 years….many people are just now learning more about how they work”.  I have used these strategies for many years now and have many satisfied clients who have reaped significant, market-linked and locked in gains over these years and have safely weathered the volatility of the market, including the 2008 market correction when all of our accounts held steady with no losses, and we have also earned gains since that market correction .  Our accounts have grown as the market has risen and, unlike the current value of equity accounts , our accounts will never lose value.  By virtue of the FIA strategy, we are assured of account value protection and a lifetime income stream for the rest of our lives.  I liken this income stream to a ‘financial faucet’ of income which, once turned on, will provide a never ending, lifetime stream of income flowing from an income account ‘reservoir’ that will never allow you/survivor to run out of income.

There is no other financial platform that exists that can provide the multitude of benefits as provided by this FIA strategy. Indeed, there are additional benefits available within the FIA not even mentioned within this article. Often, when discussing financial issues, leverage is a much used word that relates to maximizing an asset. Clearly, the FIA can leverage your retirement assets to assist you in achieving and, in many instances, exceeding your financial, retirement income and legacy goals.