Reduce Retirement Risk With a “Personal Pension”

Rolling some of your 401K to an Annuity may be your best hedge for retirement income.

Sheryl Moore of Annuity News writes, “Since the United States stock market collapse of 2008, millions of Americans have seen their retirement savings dwindle. Many of these savers had their nest eggs exposed to the equities markets, and have subsequently suffered two periods of extreme losses in one decade. As a result, ‘safe money places’ are getting a lot of attention.”

Also according to this Annuity News article from 2012, “safe money” options, by comparison are returning less than one half of one percent. How do many traditional interest-bearing products compare?

• Savings Accounts: currently averaging 0.13% annually
• Certificates of Deposit: currently averaging 0.34%
• Checking Accounts: currently averaging 0.49%

Those rates are not going to keep pace with inflation or the cost of energy and food that are not included in the consumer price index. By comparison, annuities can earn as much as 8% annually.

Now, imagine buying an annuity for $100,000 that guarantees an annual payment to you of $10,000 FOR THE REST OF YOUR LIFE. An annuity is like a “personal pension.” It’s something you can depend upon.

The continuing European debt crisis and uncertainty in our stock market also adds volatility when you can least afford it. That’s why we are suggesting to our customers and those who advise you to fully investigate placing some of your 401K savings into annuities. Even though the stock ,arket has rebounded, many consider the gains a function of Federal Reserve policies that are holding down interest rates. At some point, those rates are going to rise and the dynamics of the stock market will change.

CNN Money reports ” The Obama administration proposed new rules to help retirees make their savings last throughout their lifetime — by investing in annuities.

“By taking out some of the regulatory roadblocks that have made annuities less attractive for employees and employers to add them to their retirement plans, the government is hoping to give more Americans ways to keep income flowing later in life.

What is an annuity?

An annuity is an insurance product that guarantees you a fixed income stream once you begin to draw on the benefit. It can be part of an overall retirement strategy that gives you steady income and removes the worry. Far too many Americans are depending on modest investments and Social Security to carry them through retirement. Prudent savers should explore all their options to make good decisions. In the end, you are responsible for your retirement which makes it all the more important to understand your options.

If you want to know about the state’s consumer guide to annuities, click here. To learn about the state’s Maine Life and Health Insurance Guaranty Association for insurance products, click here.

Please give us a call for a personal consultation.