Tag: understanding annuities
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Annuities & Disappearing Surrender Charges
Surrender charges on fee-based variable annuities seem to be retreating faster than the polar ice caps, new filings reveal.
“These advisor-sold contracts typically have no surrender or a very short surrender (period) with very low penalties,” said Kevin Loffredi, senior product manager, annuity solutions, for Morningstar.
Surrender charges penalize an annuity contract holder for canceling the contract before a certain date. They also allow insurance companies to recoup their commissions paid upfront to advisors on the sale of a commission-based contract.
http://insurancenewsnetmagazine.com/article/surrender-charges-disappearing-act-3332#.WYoxfxPyuUk
For annuity buyers, contracts with shorter or no surrender penalties is advantageous. In the past several months, there has been a rush of insurance companies introducing products with better surrender charge solutions. The challenge for them will be distribution.
Please contact me at 561-869-4500 or email me, Ted Bernstein, about a complementary consultation about indexed annuities and your specific needs. You can visit us at www.facebook.com/lifecycleplanners
ted bernstein boca raton florida
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Ken Fisher Hates Annuities? Pros and Cons + The Truth
Does Ken Fisher hate annuities? If Ken Fisher is against guaranteed, lifetime income in retirement, then maybe Ken Fisher hates annuities. Read the annuities pros and cons here before you decide.
Then you can contact Ted Bernstein at 561-869-4500 and request a complementary income annuity quote with guaranteed, lifetime income that you can never lose.
Guaranteed, Lifetime Income Matters Most in Retirement
Large amounts of guaranteed income for life is your most important asset in retirement. As we get older, it becomes more difficult to manage complex investment portfolios. Many people have investment advisors to help them manage these complex retirement portfolios but keeping up with the minimum knowledge required to engage with your advisors can be challenging in your 70’s, 80’s and 90’s. In retirement, investment value and asset volatility are simply the wrong measures if your goal is to have stability based on guarantees and predictability.
“Communicating with savers in terms of asset accumulation or the size of investment accounts is unhelpful and some retirement experts, including professors and other thought leaders, suggest it is even misleading.” Ted Bernstein
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 is this: What is the upside for taking on this risk? 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.
With indexing, 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 that can decrease?
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. 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 eat 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, retirement age people want to protect their IRA assets and other retirement assets from any market loss and interest rate risk. But, they want some upside when the markets are up. It is okay to have some assets in the stock markets but I am against having any 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: ‘What benefit are you getting from investing without the protection?’ Once people understand how these tools work for them, they re-balance immediately.
Want to learn more? Please contact me. I will clarify and answer any questions on a complementary basis.”
Ted Bernstein, Boca Raton Tribune
P.S. Ken Fisher is wrong about annuities. Why does Ken Fisher advertise, Ken Fisher hates annuities? The answer is simple. Ken Fisher hates annuities because Ken Fisher does not make asset based commissions or recurring revenues from equity accounts when you buy an annuity from an insurance company.
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10 Most Common Retirement Threats – Protect Your Nest Egg
Watch out for these common retirement threats to your nest-egg.
Follow these risk proof retirement tips:
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Longevity Risk: Considered by many to be the most dangerous of all retirement threats as life expectancy continues to increase. To mitigate longevity risk, you want to convert lump-sum retirement assets into guaranteed income streams for life. This retirement threat acts as a multiplier to all the other risks. Longevity risk is the risk of outliving your assets.
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Insufficient Lifetime Income: A sustained period of near zero percent interest rates on safe investments and the evolution from government and corporate pensions to the privatization of retirement accounts has left many people without sufficient amounts of reliable income for life. Retirees today must reconsider what liquidity means in retirement. What percentage of your nest egg should be in lump investments versus guaranteed lifetime income you cannot outlive? What is the right percentage of each to ensure you don’t run out of gas and run the risk of outliving your assets?
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Inflation: With interest rates at historic lows, inflation is a major retirement threat. Learning the secrets about the strategies to manage this “silent” threat is invaluable knowledge. Like un-managed high blood pressure, inflation causes damage that can go un-noticed for too long. Periods of low interest rates are often confused for periods of “no inflation”. Inflation is especially threatening to your nest egg due to limited options to replenish principle.
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Incorrect Asset Allocation: The proper asset allocation in retirement is critical. Why do so many retirement aged people say a stock market correction or rising interest rates is keeping them awake at night? IT DOES NOT HAVE TO. Learn the right allocation strategies for a simpler retirement.
If you make one change today, increase the amount of guaranteed income from indexed, income annuities.
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Rising Medical Costs: The retirement threat considered by many to be the one capable of immediate damage to a nest egg.
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Loss of Spouse & Dementia– Both married couples and single retirees can expect to deal with the real issue of potential dementia in the aging process. For married couples, the loss of a spouse often compounds these challenges and has proven to be one of the most significant retirement threats, especially when one spouse has primary responsibility for overseeing the retirement plan. Leading economists and retirement scholars agree about the benefits of guaranteed income you cannot outlive.
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Investment Scams: Be careful of “too good to be true” investments. I have very good radar for scams. Feel free to contact me for an opinion.
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Fees: Fees and other charges are similar to taxes levied against your investments. They are disclosed, easy to measure and they add up.
4. Bad Advice: You know it when you see it. I meet with people in or near retirement every day whose number one objective is “no losses”. Yet, they’re retirement assets are invested in stocks and bonds. It never hurts to get another opinion and having a team of professionals with different disciplines is good prevention. Just make sure one of them is a retirement income specialist.
5. Market Losses: Right up there with longevity risk, market losses can be the most devastating retirement threat. You cannot afford losses in retirement. You don’t have income to replenish them and you don’t have the time needed to overcome them. A fixed income annuity keeps you invested with no losses, EVER.
This is just a partial list of retirement threats to your nest egg. The key to security in retirement is to make sure you are not vulnerable to any of these threats. With the right strategy, you can eliminate every risk to your nest egg that leads to peace of mind you may not currently enjoy.
Please call me at 561-869-4500 or email me, Ted Bernstein, about a complementary consultation about your specific needs.
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Today Show: Make your money last with an annuity
The Today Show this week includes an important recommendation about guaranteed, lifetime income. Although 2016 was a banner year for indexed annuities, we have a long way to go. Too many people do not understand indexed annuities and as a result, they are still measuring their retirement security by the size of their portfolios. As this story points out, you want to “convert” your retirement assets into an income stream that will last as long as you do. Guaranteed income in retirement is the gold standard for security.
“Building block 2: A Fixed Annuity.
Consider converting a portion of your nest egg into a fixed, immediate or deferred annuity that will cover the gap. Essentially, you’re using part of your nest egg to buy a paycheck that can be structured to last as long as you (and perhaps your spouse) live.”
http://www.today.com/series/starttoday/jean-chatzky-how-make-your-money-last-after-retirement-t106561
If absolute security is a primary retirement goal for you, please contact me to arrange a discussion about guaranteed income solutions. There are dozens of threats to your nest egg in retirement and I will explain how to mitigate them with the power of guaranteed income contracts. You will not learn about these strategies from traditional money managers. You can email me or call me directly at 561-869-4500
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ROI = Reliability of Income
In Retirement, ROI is Reliability of Income. Helping you shift your focus from asset accumulation to guaranteed income will create more security in your retirement plan. Economists, professors and thought leaders all over the world are helping planners and their clients change the dialogue about why sufficient levels of lifetime income are more beneficial and valuable than asset accumulation in retirement. If your goal is maximum security without principal risk, you will benefit from this shift in focus.
The financial risks of living longer.
We strive to create a long, healthy and enjoyable retirement. That is a reality if you are well positioned in retirement with reliable sources of income supporting your lifestyle. The financial downside of living longer is the increased risk of outliving your wealth – referred to as longevity risk. Many professors and economists believe it is the single biggest threat in retirement.
Warren Buffett (that wise, wise man from Nebraska) said, “that in order to succeed, you must first survive.”
When it comes to retirement income, investors are dramatically underfunded, but that trend might be changing: Willis Towers Watson’s 2016 Global Benefits Attitudes Survey found 59 percent of millennials and 66 percent of Baby Boomers are willing to pay a higher amount for a guaranteed retirement benefit. The data suggests that people with guaranteed income in retirement are happier than those without it.
Protecting your spouse.
For couples, joint annuities allow a steady flow of income during each spouse’s lifetime and after the first death. Compared with a single-life payout, a joint payout will pay less each year, but the guaranteed lifetime income for your spouse will take care of her in a way that nothing else can. Managing a complex investment portfolio for a surviving spouse is challenging on nearly every level. Converting your retirement assets into guaranteed income streams is retirement planning state of the art. The assets remain 100% liquid and there can be no losses. Gains are added to the principal.
Further, I believe that guaranteed monthly income payments are perfectly suited to offset the risks of health changes and normal cognitive declines.
How to Manage Longevity Risk.
Ideally, you need guaranteed, lifetime income streams that provide income for as long as you are alive, under any conditions. You, nor your spouse, can outlive guaranteed, lifetime payments from an insurance company. Too many people in or near retirement are invested too heavily in the stock market, creating a real threat to their nest egg when the market has a normal correction. By re-balancing your portfolio, you can move these assets out of harms way and put a protective wrapper around them.
Absolute security in retirement requires that you convert a portion of your retirement assets, including IRA monies, into reliable lifetime income from insured contracts that create guaranteed income from insurance companies. Working with experienced retirement professionals ensures your heirs will receive all unpaid principal if that is your goal.
According to Yale Professor, Roger Ibbotsen:
“Investors should be willing to pay an insurance premium to hedge away the longevity risk.”
You need guaranteed income solution if you are:
- At or planning for retirement.
- Concerned about outliving your money.
- Concerned about spouse’s well-being upon your death.
- Currently have retirement assets invested in bonds, stocks or real estate.
- Have insufficient guaranteed lifetime income.
- Concerned about losing investment control as you get older or if health is compromised.
- Do not have a plan for retirement or longevity risk.
- Concerned about outliving your money.
A Private Pension – How it Works.
There is no principal risk. A longevity annuity is designed using indexing strategies. Simply put, this means there is a guaranteed floor of 0% and reduced gains on the upside. When the market is up, the contract will capture some of the gains and when the market is down, there are NO LOSSES as you contractually cannot earn less than 0%.
Return of Premium – I recommend contracts that are 100% liquid from day one (minus any disclosed contract fees). With this special guarantee in place, you are protected from unforeseen events or a bad decision. With all of your capital GUARANTEED and LIQUID, you have the freedom to take advantage of “better” contracts if it makes sense to do so in the future. Without the traditional surrender penalties levied against your account if you change your mind, threats from inflation are minimized.
Mortality Credits.
There is no other investment that guarantees income for life without ANY principal loss – ever. Because insurance companies create assets called mortality credits and then share them with their annuity clients, they are able to do what no other investor or company can do. The word guarantee does not apply to the world of equities. Longevity annuities are built around guarantees and this is quite a distinction offering you real choices.
Income for life, 100% liquid from day one, guaranteed principal protection and tax deferred growth. A secure retirement plan should be built on this foundation. An advisor who is experienced in retirement and longevity planning will prove to be invaluable to helping you create reliable income you cannot outlive. In retirement, an income advisor will become the most important member of your team.
If guaranteed lifetime income is a primary retirement goal for you, please contact me to arrange a discussion about helping you with retirement security and the power of guaranteed income. You will not learn about these strategies from traditional money managers. Please email me or call Ted Bernstein directly at 561-869-4500.
Ted Bernstein, Life Cycle Financial Planners
- At or planning for retirement.
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Guaranteed, Lifetime Income Trumps Asset Accumulation in Retirement.
What is more important in retirement, assets or guaranteed income? More and more retirees want lifetime income and protected principal.
Too many people are tired of seeing their retirement assets whipsawed by the markets and guaranteed income is receiving its proper share of consideration. With markets at all time highs, now is a perfect time to convert assets to income.
People want security and less stress as they transition into retirement. Before retirement, we focus on accumulation and growing our assets. Time is on our side and we are still earning income. These are powerful factors that justify this mindset. More assets means more future income. We see this validated when purchasing income generating annuities.
Decumulation.
Decumulation is the technical term for the distribution phase of retirement. Who does it benefit to remain focused on asset accumulation, in retirement? More and more economists and retirement professionals are suggesting that we shift our focus from asset accumulation to asset protection and guaranteed, lifetime income. As retirement experts, we are questioning the conventional wisdom that underpins this issue. Like everything in financial planning, each person’s circumstances are unique and this uniqueness drives individual recommendations. Factors such as succession and health play a role in how much of our retirement assets should be converted to income. For each of us, there is a perfect balance.
You can reach us at 561-869-4500 or email Ted to arrange for a complimentary consultation. If you are worried about keeping your retirement assets at risk, let’s talk.
