The reason anyone saves money is to benefit from that money in the future.  However, the benefit is not how much money you have; the benefit is what money allows you to do.  Money in retirement may give you peace of mind, more tangible benefits like travel, or the ability to help others.  Money is ink on paper until you convert it to something you personally value.  Your values may differ from your friends and neighbors.

In America, many of us are so focused on keeping score with our investments we lose sight of the purpose for our money.  In retirement, money is typically spent incrementally as an income stream.  If you are retired, how often do you take $100,000, $50,000, or even $25,000 out of your account to spend at one time?  The answer is rarely, if ever.  Retirement income is about the efficient distribution of your money, not the growth on your money.  Despite this reality, too many consumers chase rate of return through a growth strategy to generate income.  It is more efficient to use income strategies to provide income. 

The stock market has a negative rate of return during the past 12 years, yet stockbrokers insist the key to financial security in retirement is growing your money to “stay ahead of inflation.”  Some comments from my industry truly make me laugh.  How does a negative rate of return keep up with inflation?  Why does it make sense to seek more income through a growth strategy versus a distribution strategy?  With stockbrokers, all paths lead to the stock market.  Saying something is so, doesn’t make it so.

If you could earn 8% guaranteed on your principle until you decided to take income, then take 5% or 6%  guaranteed income from that principle amount without any investment risk; would you?  Sounds essentially like finance 101 (except the no investment risk part).  Take risk and hope to earn 8%, net of fees & expenses, and then reduce risk and spend 5%-6% without fear of running out of money if you live too long.  You can choose a strategy for some of your money that provides a similar outcome, however, absolutely none of your money is exposed to stock market risk. 

Lifetime Income Benefit riders on fixed annuities provide the income result clients typically seek from the stock and bond market, without investment risk and much less cost.  Guaranteed 8% accumulation (for up to 20 years) on your income account value, and then receive 5%-7% guaranteed income for life depending on when you decide to take income.  You retain control of your principle during accumulation and distribution of your money.

There is detailed information to understand with every financial vehicle.  Every client is unique, so let’s explore whether this strategy has a place in your financial situation or not.  Comprehensive financial planning involving all alternatives available will assure your money is working as hard as it should.  You deserve to understand all the pros and cons of every alternative.