Monday, November 29, 2010

Who Says There Are No Guarantees in Retirement These Days?

Who Says There Are No Guarantees in Retirement These Days?

Did you know that you can add a separate income option to your IRA, 403(b), 401(k) or even nonqualified funds that will guarantee an 8 percent annual compound interest, regardless of what the stock market does?

Let’s set the record straight – this isn’t wishful thinking! This has been happening and still happens for retirement investors today. My regular readers already know that I allow no room for any “smoke blowing” on this blog. I present only practical, factual strategies that serious retirement investors can implement today.

For Real? Yes, Really!

It is understandable that with the recent mess in the stock market, as well as investment scams galore, it may be very difficult for you to consider something like this as a viable possibility. There are even scores of so-called financial advisors who do not have the slightest clue about what I am discussing here; that may be surprising, but it’s understandable, too – because of the thousands of investment options/companies out there, only about 40 of them (as in four-zero) offer these options in any form.

And given that the majority of financial professionals are not independent, in the sense that they work for a specific provider and therefore cannot offer options outside of their company’s portfolio, what are the chances that investors who work with them will be exposed to these options?

Anyway, without making things complex, here’s how this specific solution works. You may attach an optional feature to your retirement account that basically states that for the sole purpose of determining your lifetime income, your funds will grow at a guaranteed 8 percent annual compound interest for the next ten or twenty years, or until you start taking income – whichever comes first.

For one thing, I think this is beautiful because right from day one, you are able to know your exact lifetime income in the worst-case scenario. I must remind you, though, that this is an optional feature, so you don’t have to use it – it is totally up to you. Sort of like having a backup file for your computer, it’ll become handy when you actually experience a crash. Other than that, you’ll not need it – or would you? If the stock market performs amazingly well over the next 20 years and you end up with much more money under your base contract, you won’t have to use this feature.

But for those who believe that maybe – just maybe – their portfolios will not consistently earn 8 percent every single year for the next 20 years, this feature is pretty amazing.

I do not and cannot predict the exact future performance of the stock market – I’m thinking I wouldn’t be working if I could. But having spent several years helping a number of retirement investors, here’s what I can tell you: potential is not a retirement strategy. Potential return is never the same as actual return. You could potentially make a gazillion bucks overnight, but you could also end up with much, much less than a guaranteed 8 percent, annually compounded. You could also potentially end up with absolutely nothing.

In that instance, this optional feature would come in very handy, wouldn’t you agree? Several of our clients have secured their retirement incomes this way. But before they did, we provided an analysis of their year-by-year income account growth, and their correspondent guaranteed lifetime incomes.

JAY says “This is Unfreakin’ Believable!”

Jay is a DC-area attorney looking to retire in 10 years (at age 66), who was referred to our firm by one of our existing clients. Jay’s main concern was that – based on what he’s seen in recent years – he wasn’t so sure how much and for how long his nest egg could afford him when it really comes down to the wire.

Boy, did I have a rather simple, straightforward proposal for Jay. Why doesn’t he set aside the portion of his nest egg that he could not afford to gamble with any longer and attach this optional feature to it? He thought it was a great idea, so he decided to protect $425,000.

So Jay’s $425,000 at the guaranteed 8 percent would result in his income account having a balance of $1,009,297.44 in just 10 years when he plans to retire (at age 66) – and yes, this is all guaranteed! He’ll therefore receive $50,464.87 of guaranteed annual income – PLEASE READ THE NEXT WORDS SLOWLY – for as long as he lives. Just to be clear, this $50,464.87 is the exact amount he’ll receive, regardless of any stock market crashes.

Again, you must remember that this is not a probability or a dream. It is what will definitely happen for Jay, come what may. Of course, in the event that the market does better over the next 10 years and that pot gets bigger, he is able to draw his income from the bigger pot – and who wouldn’t?

So now can you understand why the esteemed attorney thought out loud, “This is unfreakin’ believable!”?

I do not know how you and/or your financial advisor perceive retirement but, do you really believe that your portfolio can do better than a guaranteed 8 percent interest annually, compounded over say the next 5, 10, 15, or even 20 years, in this new economy?
For your complimentary consultation to examine whether this option may be right for you, please call Laser Financial Group at 301.949.4449 or visit us on the Web.


  1. It is a good article. However, I am already retired. I would like to invest for a short time and start enjoying the benefits of interest compound that you are talking about. Maybe is not possible. I found your articles very insightful and unique. Thanks.

  2. Hi, Anonymous - Without knowing your specific circumnstances I cannot offer any specifics. However, I'd suggest you call our office or use our website to request a complimentary consultation so we can sit and chat with you. thanks for reading!


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