Why You May Not Have a Index Annuity-

There will be times in life when you will need to make this decision and be the driver. For example  adding fixed index annuities to your portfolio because your financial planner/advisor and investment firm may never recommend this,  and the media and publications won’t either.

Why?  Because they will no longer control the money, and thus they will not be able to draw a continuing revenue stream off of this money.  

The media and publications share in this revenue through advertising, and investment type firms are the largest advertisers by far. You see, fixed index annuities are only issued by insurance companies, and only through advisors who are licensed in insurance. 

Your current financial planner/advisor and investment firm will say anything to maintain control of this money and the revenue stream from it.  This is when you start asking questions and need to have a base of knowlege to protect your best interests as a consumer. 

Now you understand why you haven’t heard of index annuities, and if you have, why you may had been told they are not good for you.  What are fixed index annuities?  Why will they benefit you and how do they protect your wealth?  Why should they be in your portfolio?  Why should they be in everyone’s portfolio?

 The key to why index annuities perform so well is simple: THEY NEVER SHOW A LOSS.  Richard Russell, founder and editor of The Dow Theory Letter, put it succinctly when he said, “He who loses least…wins!”   With index annuities we never lose. Index annuities without caps are excellent vehicles for your financial security. 

 Enjoy the gain and eliminate the pain. 

In the end being a consumer of finanical advice you need to take responsibility to know your options or at lease ask the questions from time to time.

Index annuities allow you to earn interest annually based on a portion of the upside movement in an equity stock market index such as the S&P 500,  which is the most often used (other indexes are available even within the same annuity) with NO DOWNSIDE RISK and COMPLETE SAFETY.

What is going on with Pensions?

In the past, when the stock market crashed, private industry’s employees 401(k)s lost value.  At the same time government employees and retirees did not suffer. Hundreds of billions of dollars in stock market losses had to be made up for by tax-payers. Government employees and retirees got every penny promised to them. That might be changing. 

In recent years, people in cities and states across America have learned that the pensions promised to government employees are threatening the financial health of their economies. Right now,  thousands of government workers in Wisconsin, Indiana, Ohio and other states are protesting planned cut-backs and downward adjustments to their pensions.

Many government employees who thought they had a totally safe retirement program are now learning otherwise. Retirement plan contributions are being scaled back, cost of living increases are being significantly reduced and there is a growing nationwide movement to reduce the pensions promised to current employees.

The only alternative to reducing government pensions is to lay off even more government workers.Virtually every pension expert in the country and an increasing number of government worker union officials say that further reductions in government pensions are inevitable.

Yet few financial advisors have recognized this mega-trend and even fewer are providing education to their clients who may see significant reductions in their government pensions.

The Increasing Popularity of Annuities: Hundreds of thousands of government employees, including school teachers, college instructors and employees of non-profit hospitals are already receiving government sponsored annuities through their 403(b) programs.

They have come to love these 403(b) annuities and the protections they offer. We have found that as they plan for a safe, secure retirement, these government employees quickly grasp the benefits of adding a hybrid income annuity to their retirement portfolio.

With the rapidly spreading nationwide crisis in government pension plans, we believe that millions of government employees, not just school teachers, college professors and government doctors and nurses, will be turning their attention to annuities.

Why should all of us who don’t work for the government sit back and watch?… Use this as a great example of what your next step may be to help you save in a secure vehicle.

Retirement Help

As you begin to plan your retirement, you may or may not have a good picture of how risky income planning can be. The truth is that a frightening percentage of individuals do not adequately save for retirement and if you are on the border of not having enough, or even if you think you do have enough, there is a very real chance you could come up short later in your retirement years. A retirement annuity could close the gap between what you have and what you need.

While there is no easy fix for the lack of inadequate savings, the only way to guarantee yourself a lifetime income stream that cannot be outlived is through a retirement annuity. By taking a portion of your retirement savings and purchasing an retirement income annuity, you can ensure that you will not outlive your assets. You can look at this option in two phases.

The first phase of this “income for life” model focuses on guaranteed income. In a high-interest-rate environment, a ladder of certificates of deposit with staggered maturities would work well. But in today’s low-interest-rate climate, a five-year immediate-payout annuity gives you more bang for your the buck.

Phase two focuses on conservative income-generating investments, such as a bond ladder or a deferred annuity, that can be converted to an income annuity in years six through 10. Each subsequent phase allocates a little less money and directs it toward assets that are slightly riskier. The goal is to refill the immediate-income bucket every five years.

While no single product can offer a perfect solution for the wave of baby-boomers about to retire, income annuities can be an important element to true financial security.

“Best Solution” or More of the Same…

The current economy has had financial impact on many aspects of family life including plans for retirement. No doubt, you have heard someone say, “I don’t even want to look at how much money I’ve lost in my retirement fund.”

So what retirement actions are necessary? Determine the amount of money that will be needed for retirement based on accumulated wealth, growth rate of invested dollars including workplace retirement funds; number of years between now and retirement; amount of income needed during retirement; as well as the number of years one plans to be retired.

Having an updated personal net worth statement is a good place to start this determination. 

When someone is not where they want to be in life or in their portfolio and self-aware enough to realize this, they might want to try to fix it for the better. Fixing for the better can mean a well thought out change in strategy and habits or a desperate path that relies far more on chance than is prudent.

We are in an economic situation where all measures taken previously came up short of what was expected yet the “best solution” seems to be more of the same.

Make your best estimate for how long you plan to be retired, because long term planning is still the key, even in this economy. 

Not only can the economy and having enough money be a worry but what about knowing how to make your money last over a long period of time?

Two characteristics distinguish the purchaser of an immediate annuity: desire for regular, lifelong income payments and desire to begin those payments as soon as possible.

The category of buyer that best fits this description is a retiree who wants to convert retirement savings into a regular source of income that cannot be outlived. Hence, individuals who are just retired and whose risk tolerance is heavily weighted toward security are very good candidates for immediate annuities.

Purchasing an annuity is a big decision. Online research is a good start, but prudent investors should discuss all their options and risks with an independent financial advisor.