DO YOU HAVE A DEFINED CONTRIBUTION OR BENEFIT?
This week’s article tells us that the typical U.S. household has few retirement savings, and that most people rely on social security. One of the reasons is the reduction in employers offering any retirement plan, and another is for those that do, there seems to be a shift away from “defined-benefit (DB) toward defined-contribution (DC) plan” What does that mean to the employee trying to plan for retirement income? “In a DB plan, a beneficiary receives a lifetime retirement income based on their years of service and their final salary. By contrast, a DC plan is one in which the beneficiary makes payments into an investment account, and then receives the accumulation, plus the investment income, on retirement.” If you are in a DC plan and think that having a product that guarantees you income for life would benefit you, call us. We can tell you what your options are. We’re always here to help.
GET CONFIDENT
“Imagine trying to take an around-the-globe trip without looking into the details. In essence, that’s what millions of Americans do every day as they ponder retirement. They head out on the journey and hope for the best.” We believe that the best course of action is one that is planned out, planned well, and planned in advance. That task is always daunting when there are uncertainties ahead. Call us, we may have some ideas you haven’t thought about, and we’re always here to help.
EDUCATING
We believe in educating our clients, and appreciate the frustration that can occur when conversations about retirement planning include words that may be new, or difficult to understand. Because of this we thought to give you an extensive glossary of terms that you may hear or read about in the news, along with some easy to understand explanations. We think this will help you to better understand your choices, and to ask questions that are personal to your situation. Call us, we are always here to help.
INFLATION’S IMPACT ON YOUR INCOME
We often talk about retirement in terms of understanding what expenses will be, and then comparing that to sources of income. An additional factor in this equation for retirement that is sometimes forgotten is inflation. This week’s article tells us that “the popular measure of inflation, sometimes called headline inflation—rose by 1.9 percent in May 2017 vs. May 2016, before seasonal adjustment. Core inflation—the overall index minus the effects of price changes for food and energy—rose 1.7 percent for the 12 months ending May 2017. (Most economists prefer a year-over-year time frame and the core—not the “headline”—inflation measure.)” How will this impact on your retirement planning? Call us if you’d like to discuss this and sources of income that may help in your planning. We’re always here to help.
SAVING WHILE PAYING OFF LOANS
Whether we are dealing with personal loans like paying off a home or car, or having discussions with family members about paying student loans, the conversation often circles back to the heart of the problem; finding ways to save money while simultaneously paying off loans. I found this week’s article interesting and thought to share it with you because it provides four suggestions for accomplishing this goal. As you speak with your loved ones about how these strategies might work in your circumstance, give us a call. We are always here to help you navigate the road to better achieving your objectives.
THE SECRET
This week’s article that I thought to share with you is called “The Secret to Generating Lifetime Income.” It states that “one solution to help ensure lifetime income is adding a fixed indexed annuity (FIA) to your retirement portfolio. These products can help balance your portfolio and generate guaranteed income for life.” We certainly don’t keep these products a secret, as they are frequently used by retirees to supplement social security income. Call us, we are happy to explain how they work and to discuss if they might be a good option for you to consider. We’re always here to help.
AT LEAST ONCE
“While a whopping 94 percent of Americans currently give themselves a passing grade on retirement, a third of them have confessed to stopping retirement savings at least once”, according to a new report cited in this week’s article. Stopping savings can happen for a variety of reasons ranging from loss of a job and income to added unexpected expenses. Because these events can also happen in retirement where income that is not derived from guaranteed investments declines, or health care costs go up, it is best to plan for these bumps in the road. Call us, we may have some choices you can select from to help you have an income you can rely on, and an income that will survive a bump in the road. We are always here to help.
RIGHT OR WRONG ONE FOR YOU?
The editor of this week’s article wrote that “An annuity can be a very smart retirement investment for many people. That’s not just because an annuity can provide a secure revenue stream — a monthly check — for the rest of your life, no matter how long you live. On top of that, the longer you live, the more you get what’s called a “mortality credit” as you outlive other people who bought into the annuity. The income gain from that can be many times greater than any other secure investment you’re likely to find.” To help explain the different types of annuities, the editor called on an economist from the prestigious University of Pennsylvania’s Wharton School to give some pointers to help understand what might be the right, or wrong one for you, including differentiating between a fixed and variable annuity. Take a look at what he said. We think you will find it of interest when you reflect on what your goals are.
NOW THAT IT IS MAY
Now that it is May and tax season is behind us, it may be a good time to reassess how retirement has impacted or will impact your living expenses. This week I thought to share with you a chart that may help you with this assessment. “Your living expenses may increase or decrease at retirement but will likely not stay the same.” You can use this calculator to help compare living expenses that you have now to the day that you will retire. This may help you to plan your savings requirements accordingly. Call us if you need help in doing this analysis. We’re always here for you.
CAN AN UP MARKET SINK YOUR RETIREMENT?
This week’s article made me think about the old adage “What goes up must come down.” Getting older always seems to involve a race against time, and if you know that you have to live off of your savings in retirement, what do you do if there if there is a decrease in your nest egg when you have run out of time to try to make any losses back? Go back to work? Spend even less than you are now? When things are good it is human nature not to remember the risks, even though they are still there, just not actualized. “Fixed indexed annuities are one of several tools that you can use to limit downside risk. You may want to reassess your strategy to see if you can implement these tools. Investing in retirement or even in the years just before retiring always presents a difficult challenge. On one hand, you need to continue growing your assets so you can fund your lifestyle and fight inflation. On the other hand, you want to avoid significant declines because you may not have time for your investments to rebound. One way to protect against this risk is to use tools that offer upside potential but limit downside risk exposure. For example, fixed indexed annuities give you the ability to earn returns based on market performance without experiencing downside market loss. In a fixed indexed annuity, you earn interest every year. The interest rate is based on the performance of an underlying index, like the S&P 500. If the index performs well, your rate may be higher. If it performs poorly, your rate may be lower. However, these policies always have a guaranteed minimum rate, so you will never lose money even if the index declines in value.” Call us if you want to talk about options that limit your risk exposure. We’re always here to help.