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have an annuity question?
have an annuity question?

3 Investors Who Got What They Needed Without Stock Market Risk

Meet Walter:  At the age of sixty-two, Walter just found out that his company is downsizing and he will be losing his job in two weeks. Walter doesn’t have a pension, he only has his 401(k). While he does qualify for Social Security, he doesn’t want to file early for a reduced benefit; on the other hand, he doesn’t want to start looking for a job, either. Where can Walter get a quick income for the next eight years? Meet Mr. and Mrs. K: The owners of a pet boarding and grooming facility, Mr. and Mrs. K already live on the island of paradise, but they want to stay there. How can they use their savings to create a $5,000 a month income once they retire? Meet Abby: A widow who inherited her husband’s stock portfolio, Abby doesn’t need to use this money for income. She wants to protect it and pass it on to her granddaughter, but where can she put this money so that it can safely earn a respectable return?


Do you need income right away? If you have an amount of money from which you know you need to generate an income, then you want to be smart with these funds. Leaving it all in the stock market is risky because it’s not about IF the market goes down, it’s about WHEN. If the market takes a hit and you are also withdrawing funds for your income, then you are pulling money from a losing account. This is the exact recipe to follow if you want to outlive your money. There is a better way. Walter had $1.2 million in his 401(k) portfolio on the day that he left his job at the age of 62. Instead of leaving it all directly invested in the stock market, he moved a portion of this money into a fixed indexed annuity where he could accomplish three things: 1) He will be paid $8,300 of income every month, guaranteed. 2) His principal is guaranteed not to go down due to stock market loss. 3) He can revisit his goals after 10 years’ time and decide whether or not he wants to continue with this investment vehicle.


Do you have a known income need in about 10 years’ time? The Sequence of Returns is a mathematical phenomenon that directly affects people who near the time of retirement. Investors who lost money during 2008 are just now getting back to even. Who knows what is around the corner? Mr. and Mrs. K know they are at the high point of their financial life. Their business is a success and they have saved over $2 million. They know they want to be smart with this money because they need it for their retirement income. Working with a qualified financial professional, they moved a portion of their portfolio into a fixed indexed annuity with an income rider that is guaranteed to grow their money at a rate of 7 percent a year for the next 10 years. That means when they retire, they will have a guaranteed income of $125,000 a year that will be paid out to both of them for the rest of their lives, no matter how long they live. Now, they know they can afford to stay in paradise.


Don’t need income? Want to grow your money without messing around with market risk? Abby inherited her husband’s investment portfolio: $250,000 in stocks, bonds, and mutual funds. She knows the stock market was good to her husband, but Abby isn’t working. She isn’t making deposits into these accounts and she doesn’t want to give any of this money away due to market loss. She wants to put it where it can grow, but instead of using it for income, she wants to save this money for her granddaughter. Does that mean that a fixed indexed annuity is not right for her? Abby’s financial professional tells her about the death benefit rider on a fixed indexed annuity. With this particular rider from this insurance company, she can grow her money safely for 10 years at a guaranteed rate of 8 percent a year. If she has an emergency, she can access 10 percent of her money without penalty at any time. In 10 years’ time, if she wants to put her money someplace else, she can.  If she passes away during the next 10 years, her beneficiaries are guaranteed to inherit all of the money in the account.


If you recognize yourself in any of these scenarios, then you’ll want to find out if an indexed strategy is right for you.
  • The pros: you get market-linked gains with 100 percent of your principal protected, guaranteed. You can also get a joint income or a single income guaranteed for life, no matter how long you live.
  • The cons: the gains earned by indexed annuities are capped, so you want to work with a financial advisor who can look past all the marketing noise and tell you what your bottom line will be. If you have a specific income need, then you will want to shop around to find the best annuity for you.
Already have an annuity? We’re happy to take a look at where you stand to see if we can help to improve your situation or get you in on a better deal. Find out now if an indexed annuity is right for you. We look forward to meeting you and to hearing your story!

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