By Dennis Kagel, Investment Advisor Representative
As baby boomers head into retirement (10,000 a day turn 65), their ideas about money are changing. Many have come to realize that an income stream that is reliable and guaranteed for life is the most important thing in retirement. With pension plans going away and uncertainty about Social Security, the responsibility is clearly shifting to each individual to provide for their future financial security and peace of mind.
It’s important to realize that growth should give way to “income planning” as the top priority for most people in their 50s. Why continue to chase after high returns when we should be just trying to hold on to what we’ve accumulated up to this point in life and evaluating whether or not it will provide sufficient income during retirement? If you continue to chase high returns, you run the risk of financial disaster: i.e., outliving your nest egg. One of the biggest problems with nonguaranteed accounts (those exposed to the ups and downs of the market) is they can’t provide a guaranteed income for life due to the nonguaranteed rates of return. If the account underperforms and you withdraw enough, you will run out of money!
There are many cases where individuals had significant sums of money saved going into retirement and they ran out of money due to the fact that they left all (or the vast majority) of their retirement nest egg in accounts with risk and when the market losses set in they didn’t have adequate time to recover. Added to that is the fact that when you withdraw from accounts that are losing value, the problem is compounded.
Individuals who have far less saved than some others can reposition their retirement accounts into plans that are guaranteed and protected from stock market losses, that have an “income account” guaranteed to grow at 6 to 7 percent, and that provide income options that will pay out a guaranteed monthly income for life. People who don’t have to worry about running out of money will experience the most enjoyable and financially stress-free retirement.
If you’re at the point where you are evaluating what the best options are for generating your “Paycheck For Life,” then please give Dennis Kagel a call at 309-454-9171 for a no-cost and no-obligation visit.