When people reach retirement age, their biggest fear is often running out of money. The last thing I want to worry about during retirement is a major downturn in the stock market. Five or ten years ago, many insurance companies introduced pension-type plans. However, when you took one of these plans and created a fixed income or income for life, you typically received the same amount of money for the rest of your life. Because of the 2008 financial crisis, exciting new opportunities have emerged.
Now, you have the opportunity to protect your assets before and during retirement. What excites me about this is that not only can you grow your money in the years leading up to retirement without risking a major loss, but once you create a guaranteed income, you not only receive more income to start with, but the income can actually grow. These companies guarantee it for the remainder of your life and even your spouse’s life. For example, if you start with $100,000 and leave it in for 10 years without any losses, you could easily have $200,000 in 10 years.
If we were to start the guaranteed portion at that point and it was 7%, you would be starting with $14,000 a year. Most other programs we have seen only offer a 4% figure. What’s great about these new products is that when the market increases by 20%, for example, you are able to capture around 80% of those gains.
On the other hand, if the market were to go down by that same amount, 20%, you would take no losses whatsoever. These new products deal with your cash money and give you the opportunity for growth during retirement, with guarantees in place that you will never receive less than what you started with.
We are currently discussing options for those who are 4-5 years from retirement or retiring within the next year. Many people come in with the fear of not knowing what to do and not finding an outcome that they would be happy with. Suddenly, it’s like, “Why wouldn’t I do this? This makes me pretty happy.”
We’ve been doing this for over 30 years and have seen a lot of companies come and go. We understand the difference between what makes companies succeed in providing these guaranteed incomes well into the future.