No-Go Years
A great career New York Life agent, Tom Hegna, learned a lot in his successful sales career. After retiring, he put together marketing materials for licensed agents to help us understand the VERY MUCH MISUNDERSTOOD concept of setting yourself up for guaranteed lifetime income from top rated insurance carriers.
Tom has been on PBS and speaks around the country on this extremely important retirement income concept. As a long term-insurance licensed professional, I heard Tom speak a few years ago and bought everything he was marketing, CD’s, DVD’s and books. From his materials, I borrow my theme of this blog the “No-Go Years”. I am not far away from those “Go-Go” years of retirement. Frankly, some of the hardest people to get tied down to an appointment are the newly retired folks here in Arizona.
Though the Covid-19 virus might have paused these energetic seniors a few months, I am seeing the golf carts rolling again in retirement communities. These newly retired seniors are out and about again enjoying their newfound freedom from having to go to work every day. And it is YOU I want this blog message to be considered. Now practicing financial services in my 5th decade, I saw the change come in about 10 years ago. In the past, the main concentration of financial advisers (including myself) was to advise clients to accumulate assets until retirement, then continue to manage them by drawing “some’ income each year to pay for their retirement expenses while still actively managing the accounts.
What this meant was clients had to rely on their own investment skills and keep managing their money in the stock market, mutual funds or bank CD’s. Well no one has any substantial retirement money in bank CD’s nowadays since the banks decided to stop paying any acceptable rate of return on these once famous investments that no longer have a chance to stay up with inflation. So that leaves securities accounts left to manage. After having to watch the stock market most of your adult life, don’t you have better things to do now? Many of my insurance product clients feel taking a guaranteed income option (and only having to look at the account once a year to make new option decisions) makes more sense. This gives them 364 days of freedom to not worry about their money or have to keep a watchful eye on it.
Guaranteed Income options are not new. Most retire after setting up social security payments as their base. Some still have pension plans that often set up at retirement to pay monthly income (new laws say you have to do this by age 72). The rest have self-employed retirement plans or 401-k type retirement plans which are often set up at retirement to draw monthly income. More conservative investors have life insurance annuities that of course are built from the ground up to pay systematic monthly income to you. Some are still in the stock market. (Variable) The rest are in either a fixed rate (they pay more than the bank usually), and some invest in fixed indexed annuities that allow stock market type returns with no chance of loss. (All annuities protect the principal invested against loss notwithstanding a variable annuity that does so only if you die and your heirs claim the death benefit option}.
There is a formula few adhere to in these modern investment times. That formula is taking your age away from the number 100 to determine what percentage of your investment income producing assets should now remain in securities type investment accounts. (Example: 100- age 65 = 35% should be invested in variable type securities accounts). It is no doubt that many stay invested heavily in the stock market after retirement because they feel they can’t get a proper rate of return anywhere else.
That may be true until a large correction takes place, or many plunges take place over a period of a few days or a few weeks. Though big run ups in the stock market the last few years seem “normal”, the average investor over long periods of times has been rewarded in equity accounts. But those who got shaken up last March with the sudden drop after the Covid-19 news hit, should not forget that large sudden plunges in share values of even the most popular stocks causes sudden plunges in your value, realized or unrealized. Younger investors did not grow up like I did hearing “what goes up has to come down” comments from those who survived the great depression. Like a balloon full of helium slowly leaking out… they may be right.
Which brings us to examine the “turn” in retirement income planning. You take social security and once you do, you are set in stone for the rest of your life other than small annual cost of living increases. You traded all those years of SS withholding (yours and your employer payments) for not a lump sum but a guaranteed monthly income for the rest of your life. (or so we hope if the US government keeps the program solvent). So, what is the best source to also follow that strategy for building retirement income (we call it retiring happy)?
We all have to invest wisely to be sure we have money or income left over for the “No-Go” years that will come, sooner or later. While enjoying early retirement “Go-Go” years and then the “Go-Slow” years, we must make sure enough is left for the last trimester of our senior lives. There is no better way then to choose early, a guaranteed income option which will be with us for the rest of our life.
It is highly rated carrier sponsored fixed annuity investment accounts with guaranteed income riders that guarantee a minimum monthly paycheck for the rest of your life. Of course, options exist to also allow your heirs to receive income as well depending on the plan, the carrier and the choices you make up front when you invest a lump sum amount (premium) into one of these plans. And most importantly, our firm uses almost exclusively “indexed” options on these plans so you can receive a good chunk of stock market type return on your money while guaranteeing your principal will never be lost.
No other investment exists on this planet. Trust me, I have studied the investment field for nearly a half century in professional financial services. You can take a look at my award-winning carriers on board with our firm by asking me a simple question:
“Hey Mike, let me see how much guaranteed monthly income I can get for the rest of my life if I give you $50,000, $100,000, $250,000 or maybe $500,000?”
The time to STOP worrying about your up and down trades in the stock market is the day after you switch a nice portion of your investment nest egg to “GIO” investing. (Guaranteed Income Options) After all, you retired to get away from work, didn’t you?
M.D. Anderson, AZCLDP, Insurance Consultant, Realtor, Accountant, Notary
Call me at 1-800-782-2806