If you are asking this question rest assured you are in good company. Today’s retirement landscape is the result of companies dumping their pension plans in droves over the last twenty or so years! Most pensions were very similar to today’s commercially available immediate income annuities. Buy one and your income is guaranteed, no matter how long you live! Sounds simple and straight forward, right?
Well, not so fast. There have been so many innovative changes in… [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] …annuities over the last twenty years to help solve this pension to annuity shift it’s enough to make you dizzy, just thinking about it.
We know that you want the best possible annuity, but there are hundreds of insurance carriers offering thousands of annuities! To further complicate the matter, every state has different versions of each annuity. So how do you compare all of these annuity options when it is nearly impossible to find a location where all of this information is aggregated for you? You have to find – and trust – an annuity salesman or a properly licensed financial planner to help you narrow your selections to the best possible options for your situation.
So if you are trying to design your own pension style lifetime income, you have various options – not just the traditional immediate lifetime income annuities, but also more innovative derivations that have become preferred lifetime income and growth annuity options for retirees today.
For instance, one of the most popular retirement annuities today is the fixed index annuity which can work for **guaranteed lifetime income, access to principal and higher interest growth potential by using stock indexes as benchmarks with no market risk to principal. There are three primary reason why these annuities have become so popular. First, they are not variable annuities that risk your principal; second, they are not immediate annuities that have no account value to access or pass to heirs; lastly, they are instrumental in financial planning for structuring predictable future income streams that are safer than relying solely on stocks and bonds.
So, what’s the catch? Here we go again – selection, selection, selection… that’s the real catch in choosing between thousands of state specific annuity offerings that change frequently! Our advice – do some research, get a cursory understanding about all types of annuities, and then seek out a true Series 65 licensed fiduciary financial planner who specializes in balancing annuity allocations with other investments in your portfolio.
Let a trustworthy professional do the heavy lifting for you and expect them to provide you with multiple options to choose from that have various probabilities of success. Try to avoid getting caught between choosing annuities based on the most persuasive salesperson! Retirement planning is not the same as comparing three bids from different stores for a new refrigerator. Your retirement deserves in-depth, competent financial planning from an advisor you can trust.
Here is a link to the article we discussed in the video…
I don’t have a pension. Do I need an annuity?
My husband and I have nearly $1.5 million in savings and are nearing retirement, although he has some health issues that may force him to retire sooner than we’d hoped. We like the plan our adviser has put together for us, but we’re unsure of the markets and are considering using some of our savings to buy an annuity for guaranteed income. Our financial adviser says we’re fine without an annuity, but we’re still unsure since neither of us will receive a pension. What do you think? — M.C.If the combination of reasonable withdrawals from your nest egg plus Social Security will safely generate all the retirement income you’ll need, then your adviser’s assessment that an annuity is unnecessary may very well be on target.Then again, I know that some advisers just don’t like annuities, period. It may be because they’re wary of the fees associated with certain annuities or they don’t want to tie up a client’s money in one. Maybe they know that diverting assets to an annuity means a smaller nest egg for them to manage (and thus lower annual management fees). Or they may have other objections.
Truth is, there are any number of reasons an adviser may or may not recommend including an annuity in one’s retirement income plan some of them totally valid, others more questionable. And I don’t know enough about the particulars of your situation or your adviser’s motivation to say whether I concur with the recommendation to pass on an annuity.
But I do know this: You and your husband are apparently concerned enough about whether you’ll have enough guaranteed income in retirement to make you feel comfortable and secure that you raised the issue with your adviser. To me, that warrants more than a “You’re fine” response.
Ideally, your adviser should lay out several options for creating retirement income and run the numbers for each of them. After all, if you’re paying an adviser for advice, I don’t think it’s asking too much that he be comprehensive and show you a variety of ways you may be able to satisfy your needs.
So, for example, one option is to show you how much income the combination of Social Security plus your nest egg might generate (and how long that income stream might last) based on different withdrawal rates from your savings and how the adviser divvies up your retirement portfolio between stocks and bonds. (I assume your adviser is already proposing some version of this plan.)
Your adviser could then compare that strategy to other options, such as devoting not all, but a portion of your nest egg to an immediate annuity, a type of annuity that in return for a lump sum of cash guarantees monthly payments for the rest of your life. Your adviser could also show you how much income you might generate by using a smaller portion of your savings to buy a longevity annuity, a type of annuity that doesn’t begin making payments until sometime the future, say, 10 or 20 years from now.
For this approach to work, however, the adviser needs to take the time not just to develop these different scenarios, but to guide you through the pros and cons of each alternative and then help you come to an informed decision that addresses not just your financial needs, but your need for peace of mind in retirement. The key phrase here is “informed decision.” This shouldn’t be an exercise where the adviser goes through the motions of laying out alternatives or presents them in way that simply leads you to the option he prefers (or that puts his interests ahead of yours.) [Read More at Gant News]
Using OutCome Based Planning™ for Your Retirement
"The Annuity Guys will never call you unless you request our assistance". When you are ready for specialized help we will be available to assist you.. We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio with annuities so you can meet your retirement objectives by "first identifying the least amount of your investments or savings 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.
"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 an independent, licensed insurance agent and (also a securities licensed fiduciary financial planner) who has access to many different companies and annuities 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 us.
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 an Annuity Guy's 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.