Improving Retirement Incomes

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We’re now deep into a period of time where the market has been quite volatile and people are looking for alternative solutions for their retirement planning. Forbes magazine published an article called Improving Retirement Outcomes with Investments, Life Insurances, and Income Annuities [1], that might help you in your planning.

Often people read articles cautioning that annuities and life insurance are no good. People are advised to invest in x, y, and z products and hang on for the ride, despite the ups and downs. The challenge is that as human beings go through periods where markets go down significantly, they get worried. Not knowing what will happen causes stress for them and challenges their belief as to whether they’re doing the right thing.

From a financial planning perspective, the combination of having good financial balance between a strong investment portfolio as well as having life insurance and income annuities, can smooth the ride during retirement. When you have a guaranteed income for life, the landscape by which you view retirement planning changes. The more guaranteed income people have, the safer and more secure they feel.

Twenty years ago, many people had defined benefit pension plans, which gave them a guaranteed income for life. Today, companies are offering people a 401k, or profit sharing plans. Fewer and fewer companies have the types of plans that give you guaranteed income in retirement.

The Forbes article talks about how planning today could create a better result if you don’t just have investments but also have income annuities, which work like defined benefit plans. They allow you to buy an income for life that can’t be adjusted down. There’s no risk in these vehicles and the amount of income is determined by:

• The amount of money you put in;
• How old you are; and
• What options you choose:
• Do you want the income for your life?
• If you’re married, do you want it for your life and your spouse’s life?/li>
• Do you want to set it up where you have a refund, so if something happens to you prior to getting all the money out, the remainder would be refunded to your estate in cash.

A lot of times people also want to make sure that their principle is maintained for their legacy. So having life insurance as part of your retirement portfolio allows you the safety net or what we like to call the “permission slip,” to spend and consume your principal and your interest, like an annuity does.

With careful planning, as the article points out, you have the ability to have less risk and greater income. I think that’s what most people want to accomplish with their retirement plans.
Take a look at this article and if you’re interested in learning more about how guaranteed income annuities and life insurance can improve your retirement, give us a call.

Improving Retirement Outcomes with Investments, Life Insurances, and Income Annuities

[1] Pfau, Wade. “Improving Retirement Outcomes with Investments, Life Insurances, and Income Annuities.” Forbes. Forbes, 13 May 2015. Web. 15 Feb. 2016.

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