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Income and retirement planners are helping more seniors learn how important the right annuities can be to ensuring a financially comfortable, worry-free retirement.
Santa Barbara, CA – April 22, 2015 /MM-LC/ —
Many Americans save money during their working years in order to convert the assets they accumulate to an income stream upon retiring. When there are enough assets to generate an adequate cash flow to support a retiree for life, the reward is financial independence and peace of mind.
Since priorities change dramatically as people approach retirement, shifting from an accumulation mindset to one of decumulation is crucial to developing a successful retirement plan. An experienced income planner can help seniors transition from growth-oriented investing to wealth preservation for a smooth passage to retirement.
Licensed insurance agent, retirement expert, radio host and author Brady Schmidt recommends that retirees and those planning their retirement consider a strategy that incorporates the use of income-producing annuities that protect retirement assets from stock market risk while protecting their income stream for life. Such a strategy shifts financial priorities to align with other life changes like age, health, risk tolerance and income needs for a surviving spouse, to avoid encountering some serious financial hardships during the retirement years.
Schmidt, who operates the boutique retirement planning firm Brady Wealth Management Insurance and Financial Services, Santa Barbara, Calif., says that with approximately 10,000 baby boomers either retired or transitioning into retirement every day, the main concern is making sure they have enough income to last the rest of their lives.
"By introducing investment options that reduce exposure to risk, and by planning for the unexpected such as health care costs, we can show seniors how to reduce the risks that can threaten their lifestyle and financial well being,” he says. “It’s imperative for seniors to find an expert income planner with expertise in transition planning, one who can offer a balanced plan to protect a retiree’s assets and income."
Making the transition from accumulation to decumulation can be an exciting and reassuring experience for seniors when they are working with the right professional, one who recognizes and respects the client’s need for a plan that guarantees to protect their hard earned income. Such guarantees come at a cost or fee in most cases, and income-producing annuities are backed by the claims-paying ability of the insurer since they are not FDIC insured.
When retirement forces a person to shift to a strategy that prioritizes safety, the annuity approach can be a welcomed one. Retirees can benefit from the contractual guarantees that protect their income and principal from stock market risk. In fact, some annuities perform according to certain indexes such as the S&P 500, without being directly invested in the index. This can translate to an upside potential that can yield a more competitive return than other safe alternatives. These index linked annuities may provide a hedge against inflation risk. As with any strategy there are limitations and fees, but the advisor can help their client weigh the good and the bad to determine if this approach is a good fit.
Retirees should fully examine any retirement plan thoroughly. In the case of annuities, the buyer cannot put all of his or her assets in just one basket. A good rule of thumb is to only put enough assets into a well thought out annuity strategy to guarantee that basic monthly income requirements are protected. For instance, if the retiree needs $5,000 per month to maintain their desired lifestyle and has $3,200 per month coming in from Social Security and a pension, a workable strategy might be to invest in an annuity that will provide them with the $1,800 monthly shortfall they need on a guaranteed basis, backed by the claims paying ability of the insurer.
There are a variety of annuity products available, but only a licensed insurance professional can sell annuities. In order to get the most out of this type of income strategy in a retirement plan, retirees should look for an independent agent who is an expert income planner and has access to quality annuity products.
To schedule a time to discuss your financial future and the possible role of insurance or investments in your financial strategy, contact us at firstname.lastname@example.org or call us at (805) 845-4847 today! We have offices in Santa Barbara, Oxnard, Pasadena, Los Angeles and Westlake Village to meet with you by appointment. Proudly Serving Southern California retirees for over 22 years!
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Brady Schmidt CA Dept of Insurance License #0632846 and Erin Schmidt CA Dept of Insurance License #0L07961. Erin Schmidt offers investment advisory services through AE Wealth Management, LLC. Only Erin Schmidt of Brady Wealth Management Insurance and Financial Services is registered to give investment advice.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product.
*Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured.
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