Preserving Your Assets in Retirement


“I am more concerned with the return of my money than the return on my money.” Will Rogers (11/4/1879)

That statement was first uttered by Mark Twain on November 30, 1835, but it is truer today than ever before.  People are scrambling trying to earn a decent return on investments while trying to not lose more interest.  With bank interest rates at less than what inflation is, they can’t seem to catch a break.

Retirement is not just for retirees.  People who are retired need to make sure they protect their assets from loss while making sure that their money lasts their lifetime and beyond.  The perfect plan would make it so the check to the funeral home closes out the estate.  Boomers who are planning for their retirement face tough challenges in trying to balance growth and safety to ensure their retirement is as comfortable as it can be and their lifestyle remains the same as it was during their working years.

Times have changed and the most important thing everyone, whether they are retired or working toward retirement, has to accept and realize is that this is not their parents’ economy or stock market.  The old rules don’t apply anymore.  You cannot pay attention to the old ideas of buy, hold on and don’t sell.  The market will come back.  Lincoln came back as a penny, and that took a long time.  The question is, will it come back in time for your retirement?

When the stock market crashed in 1929, it took until 1955 to get back to where it was.  If you were retired in 1929, where do you suppose you were in 1955?  Pushing up daisies probably, so it didn’t help you at all.  Did you ever stop and think about why modern office buildings do not have windows that open?  I can’t stand when brokers tell their clients, “Don’t worry, it’s just a paper loss.”  Well, I guess it is just a paper profit, using that logic.

The stock market is loaded with excitement.  It gets the adrenaline going.  It fills everyone’s dreams of striking it rich or making a killing.  I liken it to an amusement park, where if you like being scared to death or having your heart in your throat, it is great.  If you love roller coasters, than the stock market is the place to be.  What better roller coaster ride than the market?  It has all the highs and lows and speed like the best of them.

If you had to take money out of your investment accounts for retirement during the down years, of which there were many, that would have negatively impacted your funds and you would have substantially less money.  Your retirement money should be in safe havens that are not negatively impacted by market volatility.

Another thing to be careful of is when you see average returns for the past 5, 10, 20 years.  These statistics are misleading.  There is a difference between average returns and real returns.  For example, if you lose 30% in one year, you need 43% the following year just to get back to where you were two years ago.   Let’s examine this a different way. Year one you lose 50% and year 2 you make 50%.  Your average return for two years is 0, but your real return is -25%. If you invest $100,000 and lose 50% in the first year, you know have $50,000.  In year 2 you make 50% but that only equals $25,000.  You now have $75,000.  This is a loss, a negative return of -25%, if you take your average return 50% + (-50%) it equals 0, while the real return is -25%.

I have been in financial services since 1974. I learned early on some of the same lessons that my parents stressed to me.  Always pay yourself first, and that money should not be at risk.  I firmly believe that when saving for retirement, and especially if you are already retired, you should always have a portion of your assets in safe havens.  I call it building upon a foundation of solid rock and not sand.

You have to make sure that you will have adequate funds to see you through retirement with peace of mind.  In my opinion, you should not have your retirement funds in a volatile environment such as the stock market.  Remember the tortoise and the hare story and who won the race.  The fastest one does not always win.  This philosophy bodes well with investments, slow but steady will get you to your financial destination.

Today’s products are geared for today’s economic situation. You can guarantee an income you won’t outlive, so as to maintain your lifestyle.  Today’s products can be customized to a person’s specific needs and lifestyles.  I have clients come to my office that are tired of the roller coaster ride on their life’s savings.  With a fixed index annuity we can protect and guarantee their funds from negative market years, while at the same time being able to guarantee an income stream for their entire lives.

A fixed index annuity plan allows an individual or couple the following:

  • Participate in a portion of S&P 500 positive years for growth
  • Trader Vic Index (energy, commodities) etc.
  • Tax-deferred growth
  • Provide access to funds via penalty free withdrawals
  • No commissions or management fees
  • Many options available customized to individual needs

People now can see some light at the end of the tunnel and enjoy peace of mind.  I like to call it “sleep insurance.”