Published November 28, 2012
Most people realize that a Las Vegas vacation means they have a good chance of losing some or all of their money if they participate in any gaming at their favorite casino. You hear a lot of people say that they have allocated a certain amount that they are prepared to play with, and even lose, in enjoying their time at these establishments. With all of the entertainment and excitement that goes along with the gambling, it usually turns into a great time even if they do not win at the tables. The goal of the trip is to have fun and maybe win some money, but most visitors expect to return home with a little less money than they left with. Still everyone wants to be a winner and hopes that they will beat the odds.
Can you afford to have the same mentality when it comes to “playing” with your retirement funds? Can you afford to just hope your money will grow over the years? Can you afford to assume you will “get lucky” and be a “winner” at this game? What if there was a way to stack the deck in your favor so you could never lose? The good news is there is a way!
Let me introduce you to “The Retirement Planning Casino.” Like most casinos there are many types of games that you can play. At one table the “game” is stocks, at another it is mutual funds, at another its bonds, at another it is commodities, and so on. Like all casinos, you can make or lose a lot of money at these tables. But this “casino” has something unique. It has a table that guarantees that you cannot lose. Let’s look at how this works:
If you walked into a casino with $100K the dealer at this table would give you the rules to play at his table. First of all he would guarantee that you could not lose any of your money even if you lost every hand, providing you played by the rules. The first rule would be that you agree to play at least 10 hands. For agreeing to stay in the game that long he would give you a 10% bonus to play with, so you would be starting off with $110,000. At the end of the 10 hands the worst case is you lose every hand and walk away with $110,000. The second rule is that you cannot bet all your money on any one hand, but every hand you win you keep your winnings; and any hand that you lose you hold on to your winnings and the dealer does not take any money back. You cannot lose unless you decide to leave the table early, in which case the dealer will ask for some of his bonus money back and for you to pay a fine depending on how many hands you played.
This dealer has a side bet that he wants you to look at also. He says that he will guarantee that you will win $7,000 each hand on this side bet, regardless how you do on the main table. That means that after 10 hands, you will have at least $180,000 in your account: your original $100,000, the $10,000 bonus, and the $70,000 from the side bets. If you do better at the main table then you can walk away with that amount instead. Who in their right mind would not want to put some of their retirement money at this table?
You may think that such a table does not exist, that it sounds “too good to be true.” However, it does exist and is called a Fixed Index Annuity with an Income Rider. Obviously the dealers at the other tables are not going to tell you about it because they want you to play at their tables. But the reality is even better than this little analogy. In fact the Government Accounting Office suggests that people look at Annuities as part of their retirement planning because they are the only financial instruments that can guarantee an income for life. With the market performing the way it has for the last decade, the GAO recognizes that it may not be wise to gamble with all of your retirement money. These Fixed Index Annuities with Income Riders are the “Safe Bet!”
Robert Kelly is a retirement planning advisor based in Fort Lauderdale, Florida and Northville, Michigan. He has been the local advisor for and heard on the nationally syndicated radio shows Straight Talk Wealth Radio and The Retirement Solution Show. Specializing in helping clients plan for a secure retirement, Robert works to ensure his clients never outlive their income stream. For more information, contact Robert at (888) 563-5162.