Make Annuities Great Again!
2 years ago Ted Bernstein 0
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Large amounts of guaranteed income for life is the most important asset you can own in retirement. As we get older, it becomes increasingly more difficult to manage complex investment portfolios. Many people have investment advisors to help them manage these complex retirement portfolios but as we get older, even keeping up with the minimum knowledge required to engage with advisors can be challenging, at the very least. In retirement, investment value and asset volatility are simply the wrong measures if your goal is to have stability based on guaranteed, predictability. Communicating with savers in terms of asset accumulation or the size of investment accounts can be unhelpful and some retirement thought leaders would suggest, even misleading.
There is a disconnect caused by how the brokerage industry expresses the value of what matters in retirement. This disconnect is putting people at risk without sufficient reward. You must ask yourself what is more important, guaranteed principal protection or a few more percentage points of yield?
Can you afford to lose 30% of your retirement assets at this point? It just happened to millions of people in 2008. If you were one of those people, can you afford to lose principal again?
Maybe the more important question we need to be asking is this: What is the upside for taking on this risk? From my perspective, the risks far outweigh the rewards. Do you believe the market has a greater chance of being up 30% from here or down 30% from here?
There Is A Better Alternative:
Considering that you CAN participate in market gains when there are gains to be had and NEVER lose principal when the markets are down! Don’t choose to forego the protection guaranteed by the insurance company? In most cases, the insurance companies are rated better than the stocks in your portfolio. Doesn’t that say a lot?
Using an indexed fund, you can be in the market and benefit from the gains without putting your retirement assets at risk. Would you rather have an unprotected account made up of equities whose value can decrease by events for which you have absolutely no control?
With this better alternative, you can “flip the income switch” whenever you choose and begin to draw a guaranteed, lifetime income stream that can NEVER go down, for as long as you live.
Nothing else can do this. It is that simple – that cut and dry.
Guaranteed Income + 100% Liquidity is finally being recognized as a powerful combination for retirement security.
Lifetime income will hedge away longevity risk and 100% liquidity of assets ensures flexibility with the ability to maneuver when necessary. It is more important than ever for people to understand the difference between asset accumulation in retirement versus guaranteed, lifetime income streams. Until now, the primary goal has been to increase your assets in order to draw them down in retirement. Professors at leading universities and retirement centers around the world are now asking retirees to re-think the conventional wisdom. Using the right annuities that guarantee liquidity from day one, you can have your cake and it too.
“A portfolio of stocks and bonds cannot provide a guaranteed income for life, with Zero risk. On the other hand, the right longevity annuity contract does GUARANTEE you will never lose a dollar’s worth of principal and it will guarantee income you cannot outlive. Today, people want to protect their IRA assets and their personal retirement assets from any market loss and interest rate risk. But, they want some upside when the markets are up. I am not against having assets in the stock markets but I am against having retirement assets in the stock market WITHOUT AN INDEXING WRAPPER TO PROTECT THE ASSETS FROM LOSS. Whenever we encounter a client without the wrapper, we ask one simple question: ‘Why; what benefit are you getting from investing without the protection?’ Once people understand these specially designed tools work exactly this way, they re-balance immediately since there is no downside.
If your understanding of a longevity annuity is different than this, please contact me. I will clarify and answer any questions on a complementary basis.”
Ted Bernstein, Boca Raton Tribune
Also published on Medium.