Published September 16, 2011
As retirees work toward a peaceful retirement, they tend to remain on the same path that led to where they are today, waiting out any tumultuous periods in the market. Instead of using the volatile market as a means to change course, or at least spread out their risk, some people use it as an excuse to stay put.
While the most recent market turmoil continues, keeping all of your retirement money in the market can elicit unnecessary feelings of uncertainty, hopelessness, and despair.
“How do I get back to breaking even?”
“Why in the world didn’t I sell at the highest point last year?”
“ I thought I was just going along for the ride. Instead, I just ended up losing half of my retirement.”
I hear things like this all the time from my prospective clients. Unfortunately, just “going along for the ride” isn’t going to work when you are planning to, or have already retired. Safety of principal becomes more important than achieving that elusive once-in-a-lifetime gain in the stock market. Certain financial products, like a Fixed-Indexed Annuity, exist to provide that missing peace of mind for retirees.
Choosing a Fixed-Indexed Annuity could be the ideal journey for a perspective retiree, since it goes up with the market and annually locks in those gains. They have the potential to go up in a manner similar to the market when it increases, but are guaranteed NEVER to drop in value when the market declines. Though these gains may not reach as high as some would desire, the idea that it won’t decrease due to market conditions is seen as significantly more helpful.
Fixed-Indexed Annuities also have features that can be added, which can guarantee a return that will eventually be taken as an income stream. Essentially, this addition, or rider, is seen as an insurance policy for your cash value. If you aren’t happy with how your cash value has accumulated during the contract period, you can select an income stream from the higher guaranteed value and create your very own pension. There are no other products that can offer such a diverse list of features.
Fixed Indexed Annuities sound like a no-brainer, right?
Well, the difficult part is making that initial change.
Your financial advisor or stockbroker may try to convince you that he or she will be able to make you more money than a Fixed-Indexed Annuity could. Though this may be true in particular circumstances, he or she could be really, very wrong, and this is where the problem lies. As a retiree, can you afford to fall for the “Let’s just wait this one out” excuse again?
You know you’ve heard that one before.
“Waiting things out” might have been a fine idea when you were younger, as the market had the possibility to come around again by the time you reached retirement. Is your financial advisor going to pull out his fancy charts and graphs with the alpha and the beta of each stock, in hopes your eyes will gloss over and you’ll say “Yes, please, let’s just keep doing what we’ve been doing”?
As we’ve all seen recently, it’s no longer worth the risk.
Albert Einstein proclaimed that “Insanity” is “Doing the same thing over and over again and expecting different results.” Not only will allocating a portion of your retirement money into a Fixed-Indexed Annuity grant you a more predictable result, it will also help lessen or completely eliminate the madness of repeating past mistakes and expecting results that may never come. Furthermore, it will help to maintain your sanity by providing you with that elusive peace of mind you haven’t felt before.
This isn’t some Einstein-derived, E=mc^2 equation. Its financial peace of mind, and happiness is inherently connected to that.
As a proponent of Fixed-Indexed Annuities, I have yet to receive a telephone call where my client’s money in this product has depreciated because of a loss in the market. The worst telephone call I can receive from a client is they weren’t able to fully take advantage of a market gain – and a conversation like this is an extreme rarity.
Every client is willing to accept that both parties in the annuity contract will need to be happy, but not too happy. By capping your growth on the upside, the insurance company is able to make certain you will never lose money when the market declines. The unsung benefit of the Fixed-Indexed Annuity is the peace of mind that accompanies knowing you won’t lose your money at the worst possible time that you could lose your money – when you are retired and need it the most. In the period of your life when you should be the happiest, why would you want to lessen that joy by having all of your money floating in the market?
In these Golden Years, allocate all, or at least a significant portion of your retirement money into a Fixed-Indexed Annuity. You’ll quickly notice the benefits that come along with knowing that the wealth you have accumulated over the years is completely safe.
You can read more from John LaSarge at www.atlantawealthsecurity.com