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Shaky 2016 Start For Retirees


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The economic storm clouds are gathering and it’s looking like the U.S. is in for some tough financial weather.  In recent weeks the financial markets have been in utter turmoil.  It has also been the worst-ever start to a year for U.S. equities, as both the S&P 500 and the blue-chip Dow Jones industrial average have posted their steepest losses for the first eight days trading of a year.  Almost $3.2 trillion has been wiped off the value of stocks around the world since the start of 2016.

The current economic backdrop is: the lowest interest rates in a generation, volatile and uncertain markets for equities & bonds, political gridlock preventing economic solutions, an unstable global banking industry and emerging economies challenging America’s dominance.

Investors shouldn’t try and time the market and that downturns tend to be followed by swings higher, eventually.  Market timing only works if you not only make one good call at the top, but also the second good call at the bottom.  The only sure way to successfully grow your investments is to have an asset allocation plan that you stick to and continue to contribute over a long period.

Retirement is a time to keep what you’ve got rather than speculate in hopes of making more. If you have your retirement money in a risky place like the stock market and there is a meltdown, you’ll probably suffer a significant loss with no way and no time to make it up.  In fact, if you lose your retirement money because you gambled in the market and lost, there may not be a second chance…

When the economy goes into a tailspin and investments sink like a rock thrown into a lake, wall street and its army of brokers go into battle mode because their commissions hang in the balance.  Stocks, bonds, mutual funds, and diversified portfolios are now recognized as risky and not for the faint of heart. Many retired investors have reviewed their risk tolerance and found their losses have greatly exceeded what they thought – and were told by their broker and Wall Street – were possible.

Standing tall and proud above the fray is the fixed indexed annuity that has experienced no loss and has retained the potential for gain should the markets recover.  Fixed Indexed Annuities offer those approaching retirement, in retirement, and the risk averse a safe harbor to protect their hard-earned retirement money from market and interest rate uncertainties.

Index-linked annuities offers the opportunity for a higher rate because the interest rate they pay depends on the movement or growth of a stock/bond market index like the S&P 500 … but if the market nosedives you don’t because the worse you can do is the minimum return guaranteed by the insurance company.

Lastly there is the income annuity which guarantees you a period certain or lifetime income in exchange for depositing with the insurance company all or some of your retirement money. The income annuity can give you what employers once guaranteed their retiring employees: a lifetime income you can’t outlive — even if you live to be 125.

Insurance companies which are among the world’s largest, strongest and oldest financial institutions are willing to guarantee you a lifetime income you can’t outlive if you’ll deposit with them some of your retirement money.  They will take the risk associated with the markets, stocks losing value, real estate crashing and other unforeseeable developments that can erase your retirement money. You’ll still be left with taxes, inflation, health issues and non-investment risks but you’ll not be able to outlive your money.

The smart saver that rejected the “wisdom of Wall Street” and chose the fixed indexed annuity is without loss – money or sleep – and without cracks in their retirement nest egg.

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Thursday, January 14th, 2016 Wealth Management, Wealth Preservation

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