We all have heard the saying “what goes up, must come down” However, when it comes to your retirement portfolio used for income, the question becomes, how far down can it go before panic sets in? Case in point is the COVID 19 Pandemic that drove stock portfolios deep into negative territory, fortunately the stock market recovered quickly which is not always the case.
Let me give you another scenario that is recent enough for many us to remember – 2008 -2009. If you retired in 2007 with one million dollars in retirement savings expecting that million to provide $50,000 in income a year for the rest of your life, how low would you let your principal balance go before you panic? [continued below video…]
Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
[continued from above] … Your one million in retirement savings during this period based on stock market volatility could have been reduced to $600,000 or even considerably less! The challenge for many retirees is they don’t adjust their portfolio for their change in risk tolerance upon retirement. Recent retirees are used to their retirement savings growing – not declining. During the accumulation stage you’re consistently adding to your portfolio, most accounts, over time, continue trending upwards. When facing a severe market downturn realizing the need for those dollars funding your retirement income over many years, a lot of uncertainty may creep in.
So, how do you control uncertainty of market returns when you know history tells us the equities market is due for a correction or an extended bear market? Here are a few of the options that we know have been implemented by numerous people we have spoken with over the years.
- Move all your retirement savings into cash or cash equivalents at the bank.
- Common sub-answer: I’ll get back in the market when the time is right.
- Change nothing – it will come back, it always has.
- Re-position your portfolio to a more balanced position of stocks and bonds; possibly using the rule of thumb – 100 minus your age to generate a proper stock/bond mix.
- Work with a financial planner to design a portfolio reflecting your current risk tolerance and income needs.
I won’t disparage any of the people who have done any of the above options because in the right situation any of them can be successful – BUT, some of them are doomed because they are “knee-jerk” reactions and not based upon thoughtful reasoning or long term planning.
I know – you’re asking yourself, “but what about the fixed index annuity that you mentioned in the headline?” Fixed index annuities can be used as an alternative to or as a portion of many of the strategies mentioned.
In case you’re new to fixed index annuities, they are annuities that allow you to earn interest based on a portion of securities index gains while not having to suffer losses from a bad securities index performance. Index annuities do not place your money at risk in equity positions and should not be treated as such. In today’s market environment, fixed index annuities designed for growth more closely resemble bond holdings.
Hence, if fixed index annuities resemble bond holdings, why wouldn’t you just buy bonds and not have to deal with the surrender penalties or the other limiting factors of fixed index annuities? In today’s world, many individuals do not hold the actual bond positions rather they hold passive bond funds. Bond funds in a rising rate environment could suffer from a declining valuation if they have to be liquidated to provide supplemental income. Fixed index annuities offload the investment loss potential of the equities and bonds which should have a stabilizing effect, limiting your portfolio’s volatility.
In summary, a fixed index annuity allocation can smooth out returns by limiting the downside risk to that portion of the portfolio while contributing to upside earning potential; unlike bonds that can get spent down, fixed index annuities can also provide secure lifetime income **guarantees when or if needed.
Using OutCome Based Planning™ for Your Retirement
We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.
"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available."Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"
This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.
When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.
Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.
Selecting the Best Annuity & Retirement Income Advisor
Are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality advisor is now as close as a click or phone call away.
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"
We are fortunate to have a select few who we believe are truly the highest qualified advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best options available for your retirement planning.
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."
"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."
Why Searching for the Best Annuities on Your Own Can be so Frustrating...Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception!At first, it may seem that researching will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you one or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained.So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that they pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly.How can you find the best annuities for your unique situation?
- Use the internet cautiously;
- Work with a vetted and experienced specialist;
- Do not settle for that one dubious best plan. Compare multiple Outcome Based Plans to decide on the one that is truly best for you;
- Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
- Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
- Know the Five Vital Factors (listed above) that an experienced specialist must answer before helping you select the best options for your situation;
- Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...
** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)
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- MarketFree™ Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
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