Today, I’m going to be talking about the seven steps to retirement security. Before we start, let’s start with a quick story.
There were two people from the East Coast who always wanted to come to California. It wasn’t the beach that they wanted to go to. It wasn’t the mountains. It was actually the high deserts. They always wanted to jump in a van and go in the dunes and that’s what they did.
The next thing you know, they came out to California, they rent this very large, oversized van with these large, knobby tires. They get plenty of sandwiches, plenty of water, and they crank up the AC.
They take off and they are having a blast.
About 100 miles away from base camp, the passenger looks over and he realizes that they’re almost out of gas.
And all of a sudden, there’s fear.
We’ve all had that fear before when we’ve looked down at our own gas tank and it’s almost out. And whether it’s these vacationers who are in the high desert or someone who has not properly planned for retirement and you’re almost out of money, that’s the feeling you experience.
So today, we’re going to be talking about a road map. A roadmap that I am educating my clients about, ?Seven Steps to Retirement Security.”
Step #1: Roadmap
Let?s talk about the first part, which is the roadmap. So, the roadmap is something that everyone should have in some kind of writing.
There was an industry article that was handed out by Hartford many years ago, and in this article, the conclusion was that less than 25% of Americans who retire have no roadmap. That’s like if you’re going to go from here to, let’s say, New York or to Boston or to Philadelphia, and you didn’t have a roadmap. You just got in your car and you started driving.
We know that’s probably not very good for all kinds of reasons. So it’s important to have something down in writing.
And whether you’re 25 years away or 45 years away from retirement, a roadmap is essential if you’re going to have a happy retirement at age 65.
Step #2: Maximize Social Security Benefits
Number two is maximizing Social Security benefits. A lot of people are aware and some people are not aware that if you get to your retirement age, and whether that’s 65 or 67, depending on when you were born, every year that you don’t take that retirement from Social Security past full retirement, they actually bump up your paycheck by 8%. Plus any cost of living increase.
Step #3: Inflation Protection
We move into step number three, and that’s called inflation protection.
I was at Target one day and I buy a lot of my soap, detergents, cups, and things like that. And it seems like every year that I go, it gets a little bit more expensive for me.
Not a lot, but you can kind of feel that pinch a little bit and that’s what inflation does. It’s kind of like that silent, mysterious killer that no one knows, but it’s there and it’s growing every year.
And one of the things is when we’re planning, we need to actually consider inflation. And we can do that in several different ways on our retirement plan. And one of those ways is possibly getting some kind of an annuity that has a special rider that has what’s called an increasing paycheck.
That’s how we can address inflation.
Step #4: Explore a Hybrid Retirement
Step number four, is utilizing a hybrid retirement.
The steps of the perfect retirement scenario is a significant amount of cash in the bank when you retire. Then you want to replace your income from your working years with some form of social security, a pension and or annuity.
This guaranteed money should cover all of your expenses. My goal is also to make sure you have some type of cost of living increases to help offset the effects of inflation built into some of this guaranteed money.
The final step is investment money that you can harvest profits from to continue to replace the cash you use to assist in your retirement. This might be money from your IRA?s or 401-k?s. Most families invest in mutual funds. But some clients also invest in bonds, gold, stocks maybe even a side business. What comes to my mind is a client who owned a laundromat.
Step #5: Guaranteed Lifetime Income
Guaranteed lifetime income. In the world that we’re in, there’s nothing more powerful that you can say besides guaranteed, the only other most powerful word I can think of is free.
Guaranteed, in my opinion in the financial industry, is the most powerful word that we can use, there’s only one product in the world that can actually offer a guaranteed lifetime income, and that’s typically an annuity.
And let?s say that annuity is a SPIA (single premium immediate annuity). If someone is older and needs to trigger guaranteed money here within the next 30 days or 60 days, there’s nothing that can beat a SPIA. It’s as simple as that.
Or if we have a little bit of time, maybe a year, two, three, four, or even 15 to 20-years, then we can definitely put that into a deferred annuity, At the end of the deferral period this can blossom into guaranteed income for the rest of your life. Your income can never run out.
What is great about annuities with guaranteed income, the money can be guaranteed for one life or 2 lives, if you are married. Think of it, no sleepless nights worried about running out of money as you age.
Step #6: Long Term Care
As we move into step six on the road to retirement, we need to talk about long-term care.
Whether that’s the old traditional kind of stand-alone or the living benefits that come into an index universal life (IUL).
The odds of someone 65 or older needing some form of long term care are about 72% of the time.
Long term care insurance is a risk management tool, it is a shield of protection to help preserve assets and income for a long life.
If you can?t afford long term care insurance and alternative that might help you obtain some long-term care is a life insurance policy that has a rider that provides this living benefit as part of your life insurance policy.
Instead of using your life insurance policy as a death benefit you are able to access the long term benefits while you are alive. This is a new idea that some life insurance companies are including into their life insurance contracts.
To date this is probably one of the most powerful features of today’s permanent insurance.
Step #7: Home Equity
And finally, home equity. Many of us will start thinking about buying a home probably in our mid-20s, and by the time we save for our first home, we are usually in our late 20 or early 30 before we buy our first home.
And usually, it’s a 30-year fixed. It’s usually the most affordable route that, traditionally, most people will go to.
And so, by the time you’re 60, 65, or 70 and you retire, you have a paid-off home.
What’s nice about using home equity is that you don’t have to use it but it’s a very powerful tool because if you do need to take what’s called a reverse mortgage from your paid-off home that could supplement your income to assist you as you get older. Using the line of credit feature in a reverse mortgage you can utilize this only as you need extra money, such as long term care.
So this is the ?Seven Steps to Retirement Security.” Call me and let me show you how this could aid you in setting up the perfect retirement. You can reach me at 888-839-3536.