by Dave Kutcher
The word on the street is that more than 60% of Americans are more afraid of running out of money during retirement than they are of their own death.
There is a way to help alleviate this major concern and incorporate some protection against increased longevity, inflation and market volatility-Annuities. When coupled with other investment options, annuities can provide predictability and some flexibility to an overall plan.
Diversification
Annuities can provide an additional level of diversification by offering protection against the volatility that may exist in a current investment portfolio, providing guaranteed lifetime income and certain tax advantages not found in some other investment options.
Diversification should include not just different stock and bond type investments, but it should also include various products and offerings that may provide benefits not afforded through typical retirement savings plans. Different products may come with access to enhanced tax benefits and other features that are not incorporated into the traditional forms of retirement savings plans to which we have become accustomed. Today’s annuity products can offer growth opportunities as well as protection against market risk.
Predictable Income
The idea of a guaranteed income payment that cannot be outlived is perhaps an annuity’s most basic benefit and can provide a level of predictability that we cannot get from any other retirement income source.
If the predictability of government retirement sources such as social security and other pension programs is what you are seeking, you may want to consider creating your own additional retirement income stream via an annuity.
Peace of Mind
Other forms of retirement savings plans such as 401(k) plans do play an important role in an overall retirement strategy, but they are subject to market volatility risk and do not include guarantees for lifetime income. From a planning perspective, building an annuity into your strategy with predictable income on a guaranteed basis to provide at least enough monthly income to cover essential living expenses can provide tremendous peace of mind in the years ahead.
Many of the annuity offerings today include an opportunity for growth and potential for increasing income beyond the baseline guarantees. These features provide predictable income that you can plan on to cover your expenses while also providing a way to cover increased expenses due to inflation and other market related risks.
All in all, it makes some sense to consider annuities in your overall retirement planning strategy. Annuities come in many flavors and may or may not include features and benefits that fit for your planning goals. We can help you discern which plans might work best for you and which features and benefits are needed to accomplish more targeted planning objectives.
My name is David A. Kutcher, a retired Marine Corp Captain. My business partner in the lower 48 is Richard C. Scott, CLU, LUTCF. For nearly 40 years we have been helping folks with their personal retirement decisions. We encourage you to make an appointment and get ahead of your concerns as early as is possible. You can catch us on the radio every Saturday morning, “Retirement in the Last Frontier”, 8:30-9:30 on AM 650, Keni Radio and on Tuesday mornings, KFQD News Talk Radio AM 750 and FM 103.7. Frontier Retirement, 10928 Eagle River Road; Eagle River, AK 99577, (907) 795-7452.
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