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By Raymond L. Adams, CFP®, CLU, ChFC

 

One of the fundamentals of retirement-income preparation is to attempt to have your revenue producing assets last as long as you live—a current concern for most people. However, with the worldwide economic situation, most people’s retirement account(s) [IRA, 401-k, TSA/403(b), etc.] are in a constant state of accumulation fluctuation.

 

And for those in their retirement years, and those approaching them, current financial circumstances have caused many of these  individuals  to shift their attention from an accumulation focus, to distribution planning, which represents a much different mindset than we have seen in the past—and has created new challenges, new concepts, and new products.

 

Consequently, if you have a [IRA, 401-k, TSA/403(b)],  and depending on when you retire, your account value could be down from where it currently is—and, if it is, you may not have enough time to wait for it to come back up, which would affect your retirement income forever.  For many people, no matter where they have their money tucked away, this is a constant nagging concern.  Many ask themselves, "Is there anything I can do to guarantee this could never happen to me?”  Or worse yet, “what happens if I live too long?”

 

Fortunately, there are some options available that you may not be familiar with.  These retirement income product options illustrate that if there is any positive movement in the accumulating allocation you have chosen, your retirement income account value increases; BUT, if there is a negative performance in your chosen allocation, you DO NOT participate (your accumulation account stays the same)—a guarantee providing against the loss of any principle and previously accredited interest. Consequently, because you can never lose any money in your retirement account, any negative market fluctuation is irrelevant in your world. Your retirement income account will NEVER suffer financial reversals.

 

Now, with this type of product, the emphasis is truly on the future lifetime guaranteed income, not on actual growth of the contract—albeit that is built-in, if such favorable circumstances might occur.   

 

Here's a quick overview for an individual with money in a retirement account, and whether retired, or not yet retired—it could be any retirement account: (of course, everyone’s situation will be different; that's why you should consider getting together with me).

 

Without suffering any tax consequences, the person re-positioned $350,000 into a new retirement account via a trustee-to-trustee transfer (neither commissions nor fees are deducted from the transfer). This individual will now never be concerned with the performance of the market.

 

Once again, because there are multiple options from which to choose,  each with a different insurance company, this explanation is somewhat generic; contract guarantees can range between 5% -10% growth every year (for income withdrawal purposes, not growth in your account), until you begin taking out income; and payout percentages can range from 4.5% to 8%, guaranteed for as long as you live. Simply stated, every year you wait to begin your income your lifetime withdrawal percentage is guaranteed to increase, along with the potential of the income accumulation value, irrespective of the market.  

 

So, if your real emphasis is on a guaranteed future lifetime income, not solely on the actual growth of your retirement account, consider looking at a provision that is designed around this concern: it’s called a "Guaranteed Retirement Income Withdrawal Provision”, and is based on your account value today. And, whether your account truly goes up in value due to a favorable market, or not, before you begin making lifetime income withdrawals, your future guaranteed monthly retirement income check will continue to increase until your withdrawals begin…

 

And, to protect you against the next question, “What happens if I live too long?”, this concept assures an income protection, which contractually guarantees that no matter how long you (and your spouse, if you want to add that provision) live, you will have a guaranteed monthly check sent to you every month—even if you were to run out of money in your account; the amount of the check will never decrease, and if there is a spouse included it is payable until the second one dies. This concept eliminates all concerns with how the market is performing. Moreover, it provides peace of mine—Guaranteed Lifetime Income—that can never decline nor be outlived. 

 

There are many top quality insurance companies to choose from; each has their own special menu of options. Some companies have a charge for this guarantee, others do not. However, if there are charges, none of them ever alter the guaranteed lifetime income.

 

You will be hard-pressed to find any other such lifetime guarantees—not stocks, not bonds, not bank accounts—nothing else can extend a lifetime guarantee, with a never-to-be-outlived lifetime monthly income, except insurance company products.*

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In conclusion, this article is not designed to proffer you anything but generic information, and to extend an invitation to visit with me—for an initial, or “Second”, opinion on your retirement planning. If you choose to take me up on my complimentary offer, give me a call: (425) 827-9225.

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We will get together to review your particular circumstances, and then you will decide whether it is of value to you or not. There is absolutely no downside for you to review your specific circumstances.

 

I look forward to hearing from you, if you would like to get together.

 

 

*Guarantees are backed by the financial strength and claims paying ability of the insurance company.

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Capital Enhancement Group, Inc. • 611 4th Ave. Suite A • Kirkland, WA 98033 • (425) 827-9225