How Annuities Help People With Retirement
Can I Do The 4% Rule? With a $500,000 portfolio, the 4% rule suggests an initial annual withdrawal of $20,000. This amount is then adjusted for inflation each subsequent year to help the savings last for a typical 30-year retirement period.
→ However the Principal being invested in the stock market is NOT guaranteed.
Market Volatility: The 4% rule is based on historical market data and assumes a balanced portfolio (typically 50-75% stocks and the rest in bonds). Future market performance may vary, and a prolonged downturn early in retirement could affect the sustainability of this withdrawal rate. → You could run out of money in retirement.
Sequence Of Return Risk: Unfortunately those that retired between 2007 to 2009 understand this risk all too well. A market downturn can cause a 20% to 40% reduction in the stock market and one’s portfolio. → Selling shares during a market downturn can lead you to running out of money in retirement.
Solution: An Annuity That Provides Guaranteed Income For Life: Since the #1 worry of retirees is running out of money having more guaranteed income for the rest of their lives and their spouse’s life simply makes sense.
An annuity is designed to provide a steady, predictable stream of monthly payments that you cannot outlive. This helps protect against the risk of outliving your retirement savings and serves as a personal pension to cover essential expenses.
Key Features and Considerations of Annuities
Longevity Protection: The main benefit is insuring against the risk of outliving your assets. Payments continue for your entire life, even if your initial investment amount has been fully paid out.
Predictable Income: Payments are generally stable and not affected by market fluctuations, offering financial security and peace of mind.
Key Features of Fixed Index Annuities:
Principal Protection: Your initial investment and previously credited earnings are protected from market losses. If the linked index performs negatively, your annuity value won't decline.
Growth Potential: The annuity's interest earnings are tied to the performance of an external market index (e.g., the S&P 500), offering the potential for higher returns than traditional fixed annuities or CDs when the market is up.
Tax-Deferred Growth: Earnings within the annuity grow tax-deferred, meaning you do not pay taxes on the gains until you begin making withdrawals, allowing your money to potentially compound faster.
Guaranteed Lifetime Income: Many FIAs offer optional riders (often for an additional cost) that provide a guaranteed stream of income for life, protecting against the risk of outliving your savings.
Beneficiary Protection: You can designate a beneficiary to receive a death benefit, which can help ensure assets are passed to loved ones without the potentially costly and time-consuming process of probate.
Secure Your Retirement with the Right Income Annuity Plan: You've saved all your life for the opportunity to retire. But most people don't know how to retire financially. Their biggest fear, living too long and running out of money. That's where we come in. We are income planners for the middle class. We know most financial advisors have a minimum balance of over $500,000 which most pre-retirees just don't have. If you are looking for an income plan that is safe and guaranteed to last the rest of you and your spouse's lives, call us at Safe Harbor Retirement.
For A Worry Free Retirement: We are a boutique retirement income agency. We take the worry out of your retirement with guaranteed lifetime income. We take pride in being a local veteran owned company that works individually with each and every client.
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