Can You Have a “Less Stress” Retirement? Yes


Saving for retirement can seem stressful. Retirees’ No. 1 worry is that they have not saved enough to carry themselves through retirement. This problem has become an even bigger concern for today’s retirees.

People are living longer than ever, but they also have fewer sources of retirement income to draw on. In most professions, pensions are a thing of the past — less than a third of workers report they are eligible for them. Government securities programs have also seen cuts in recent years.

That means people are forced to rely on their 401(k)s and other investments for retirement. Still, you can find other ways to grow your savings rather than depending on the mutual funds, stocks and real estate holdings that took such a big hit during the Great Recession.

Embrace the “less stress” retirement approach by considering two options for maximizing your savings.

1. Fixed Index Annuities

Also referred to as FIAs, these annuities provide a minimum guaranteed interest rate over a fixed amount of years, while also generating additional interest based on how much the value of the broad market index varies. Insurers base rates on:

  • Caps

  • Spreads

  • Participation rates

Many people see these as a safer alternative to more volatile investments because you will not lose your principal payments. Even if the index used to calculate the interest payments (usually Standard & Poor’s 500) underperforms, the minimum interest rate will stay at zero.

You receive some flexibility. You can stack and ladder the annuities for tax and performance reasons. In case you should need cash quickly, they also have flexible liquidity options, even during the surrender period.

2. Adding Income Riders

You can attach income riders to your annuity as well if you want a monthly payment during your retirement (though you can also arrange for quarterly or yearly payments).

This is the sort of reliable income you can plan your retirement around because it pops into your mailbox or bank account like clockwork. Even if your account balance falls to nothing, you still receive your regular payment.

Your longevity risk moves from yourself to your insurer, who is responsible for the payment. And you can begin drawing your monthly payment as young as 59.5 years old.

Use Reliable Strategies for Low-Risk Returns

As these two options remind us, retirement is all about planning. If you mix reliable additional growth with payments you can count on for an entire lifetime, you get retirement savings you can comfortably rely on without worrying about their long-term outlook.

Another great advantage of these two retirement possibilities is that you can exert a lot of control over your money. They provide the opportunity to work with your retirement planner to create a strategy that fits your unique needs. This lets you relax a bit whether you’re nearing retirement or still a few years away. You won’t have to sweat out the ups and downs of the markets.

Do you need assistance with your customized retirement plan? Get in touch with Jay to learn more.

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