When You Retire, What Type Of Retirement Would You Prefer?
According to the Office for National statistics, out of 300,000 adults surveyed across the UK, pensioners aged 65 to 79 were the happiest out of all the adults surveyed, if they had a pension because they felt less financial stress, the positives feelings they measured was higher then those who did not have a pension. Now that is great news if you have a pension!
The problem is, most Americans retiring today don’t have the kinds of defined benefit plans that give them a pension income. Instead, most people get defined contribution plans that offer some kind of employer matching benefits inside investment vehicles such as a 401(k). This gives you a way to invest and grow your money through different financial instruments, such as stock, mutual funds and bond funds, but when you retire there is no pension. It is up to you to decide how much money you withdraw from your 401-k or IRA.
THE RATE OF RETURN
When you sit down to talk about retirement planning, the issue that always comes up first is the rate of return they can receive. Investors who have worked and saved and invested their money want to know, How much will I earn? What’s the interest rate? What’s the average rate of return?
It’s not that these are bad questions; it’s that they might not be the most important question.
Maybe the most important question today is how much can I take out of my retirement savings and still make it last a lifetime?
THE RETIREMENT CRISIS
In a paper written for the Harvard Business Review titled, The Crisis in Retirement Planning, economist Robert C. Merton aptly summed up the stumbling block that seems to get in most people’s way. He writes:
Investment decisions are now focused on the value of the funds, the returns on investment they deliver, and how volatile those returns are. Yet the primary concern of the saver remains what it always has been: Will I have sufficient income in retirement to live comfortably?
THE KEY TO RETIREMENT HAPPINESS
Because today’s workers are having to save and invest their own money, they enter into retirement concerned more about “INVESTING” and rate of return that they need to achieve, what they should be more concerned about is Lifetime Income.
In an article for Time magazine titled, Lifetime Income Stream Key to Retirement Happiness, Dan Kadlec writes about how studies in the U.S. find that retirees with a guaranteed income stream are happier. Lawmakers are looking for a way to make it easier for investors to turn that 401(k) into a pension, and the fixed annuity option is mentioned as the simplest solution.
Most retiree’s don?t really understand the difficulties of managing their nest egg. Nor do most want to take the time in retirement. Having your retirement partly in annuities helps eliminate some of this market risk and help you have a more stable and comfortable retirement.
YOUR GUARANTEED OPTIONS
Today many people have a many misconceptions about what an annuity is and what it can and cannot do. Depending on the financial advisor you speak with they either hate them, won’t sell them or can’t sell them.
You might be thinking an annuity is the best way for anyone who needs a pension-like income during retirement. That”s what they are designed to give you. Period. However, there are good ones and bad ones out there. There are many types of annuities but there maybe only one or two that are right for you.
If one of the keys to your happiness is a guaranteed income stream, then all you have to do is find the right annuity that can unlock the door to your retirement dream. To give you the confidence and serenity in retirement that you deserve.
Because of the many types of annuities, choosing the right annuity may be easier said than done. If you don’t have all the facts or haven’t had your annuity properly tested, you might be making a costly and sometimes irreversible decision with your money. If you need some help finding out if an annuity is right for you, feel free to reach out to us, and we’ll use our proprietary annuity review process to see if there are better options for you. You have nothing to lose and only peace of mind to gain.