On this podcast, Miguel Gonzalez shares how an annuity can help restore your confidence in retirement.
Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®
CLICK HERE TO LISTEN TO MIGUEL'S LATEST PODCAST
FOLLOW US ON:
On this podcast, Miguel Gonzalez shares how an annuity can help restore your confidence in retirement.
Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®
CLICK HERE TO LISTEN TO MIGUEL'S LATEST PODCAST
FOLLOW US ON:
INTRODUCTION
Welcome to Cortburg Speaks Retirement
An audio podcast about investing in the stock market, financial planning, money management and retirement planning. Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.
Now here is your host, Miguel Gonzalez.
HOST
Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.
On this week’s audio podcast, I discuss how An Annuity Can Help Restore Your Confidence in Retirement.
Sometimes we forget just how fragile a nest egg can be.
When the economy tanked in 2008, retirees watched in horror as U.S. markets suffered historic losses. The Dow declined by more than 50%, its biggest drop since the Great Depression of 1929.
The oldest Baby Boomers, who were closing in on retirement age just as things were at their worst, watched as their nest eggs cracked wide open and lost thousands of dollars – in some cases hundreds of thousands.
Most were left with two choices: Either keep working past the age they'd planned to retire (Boomers started turning 65 in 2011) or retire with a lifestyle that was substantially downsized from what they once had envisioned.
Under both scenarios, they could struggle to piece back together the plans they once had. But we all know how that goes. Time was not on their side.
Pre-retirement is one of the worst times to experience significant market loss, because there is often little time left for recovery. You need that nest egg you accumulated to generate income when the paychecks stop. If it shrinks, so will the amount of income you'll get.
That's why financial professionals talk so much about volatility and why you should start pulling back from risk as you get older. The markets will always move up and down. And given today's uncertainty -- both domestic and worldwide -- some loss seems almost unavoidable.
But there are distribution strategies that can help give you an edge in overcoming a loss.
For the average retiree, one way to help distribute retirement income is not by putting hope in the market, but by using an actuarial-designed product, such as an annuity. With an annuity, distribution amounts are, in large part, calculated based on your age and life expectancy; the older you are, the more you get paid.
Here’s an Example.
Let's say you know a 70-year-old man who had a portfolio worth $500,000. He expected to generate about 3% in retirement income – about $15,000 per year.
But then he suffered through a serious market downturn, and his $500,000 portfolio was reduced to $300,000. At that 3% withdrawal rate, his annual income would decline drastically. In order to replicate the $15,000 per year he planned to pull from his portfolio, he would need to invest aggressively - meaning more risk and a greater chance of losing even more money.
Now, instead, let's say your friend purchased an immediate annuity with an A+ rated carrier. With a deposit of $209,375, he could generate the $15,000 per year in lifetime income he'd originally planned on. His purchase would be converted into regular payments that would last as long he lives. His annuity would guarantee him a 7.2% return, which could help reduce his fear of running out of money in retirement.*
Using an annuity to distribute income is a way to overcome market losses -- or to avoid them altogether. And it can offer you the confidence to enjoy your well-earned retirement through preservation of the principal and regular income streams.
It is important to remember annuities do have surrender charges, making them a non-liquid asset. Additionally, annuities do have fees and can limit your ability to participate in market gains, even with products such as fixed index annuities. However, some retirees enjoy the comfort of the steady income and the protection benefits offered by annuities.
Most traditional immediate annuities are pretty straightforward once you've made the purchase. But you'll definitely want to work with a financial professional to lock down what's an appropriate product for you, and to review any changes to your goals or financial situation as you age.
Some Important Disclaimers to keep in mind:
*Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
These are hypothetical examples provided for illustrative purposes only; it does not represent a real-life scenario, and should not be construed as advice designed to meet the particular needs of an individual's situation.
Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances. As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.
This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.
DISCLOSURES
Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
CRC conferred by The International Foundation for Retirement Education.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.
Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.
Investing involves risk including possible loss of principal.
· Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
· The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.
· LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
· This article was prepared by Broadridge.