Which Way to the Best Income from Here?


People today are living into their 90s and 100s. Social Security was set up for people whose life expectancy was no more than the mid 60s. The Social Security Act of 1935 was set up to provide for the general welfare by establishing a system of Federal old-age benefits, to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue. For most Americans this accounts for most of their retirement income

While every retirement is unique, we also believe many of today’s Pre & Post Retirees face the same concerns: preserving money, maintaining a lifestyle they enjoy and securing a lifelong income.

Guaranteed Income: No Days off in Retirement

Abe Lemmons, the outspoken college basketball coach, once quipped,” The trouble with retirement is you never get a day off.” This is perhaps more poignant now than ever. Today’s retirees are living longer and facing lengthier retirements. More than half (51 percent) of Americans retire between the ages of 61 and 65: meanwhile the life expectancy of a 65-year-old today is 85. That means, on average, people are looking at 20 to 24 years of retirement with many living much longer the number of Americans living 100 years or more is up 44% from 2000.

Within the next five years, 11,000 Americans a day will reach retirement the expansion of defined contribution plans and declined of defined benefit plans/pensions (often featuring lifelong benefits) over the past 20 years means that many of these people are looking for reliable retirement vehicles. As a result, the 2025 retirement market will top 25 trillion. While this community grows, so does the demand for products that provide the benefits unique to fixed annuities, such as guaranteed income.

The general retiring public remains unfamiliar with these products, or how they perform. According to the American College’s financial literacy surveys, nothing about annuities is clear to consumers. While most pre-and post-retirees may understand the need for retirement income, they also want to understand how they can generate income.

Five Fixed Index Annuity Benefits Guaranteed Income

To help lead the discussion about benefits of these products, we outline five basic benefits of a fixed index annuity and how they produce guaranteed income.

  • Guarantee Protection- When one purchases an annuity, their premiums are guaranteed 100% protection from index volatility. This is especially important for risk adverse clients who are looking for reliable protection.
  • Index Crediting Options- In addition to the guaranteed fixed interest rate, the investor also may choose an index creating strategy that determines how interest is credited to the contract. Each year, clients can select a strategy based on their individual preferences and financial goals. Due to the annuity design, the contract is guaranteed to never lose value due to index volatility.
  • Locked in Interest- any interest earned in the contract year is credited to the contract value and cannot be lost due to index volatility.
  • Tax-Deferred Growth- one also earns money without paying taxes on it unlike taxable investments, taxes are not paid until withdrawals are taken or income received. This allows the contract value to grow quickly while affording clients an opportunity earn interest on both the interest and premium over time.
  • Guaranteed Payments- Depending on the individual contract, clients have many income payment options, ranging from a lump sum to a lifetime of paychecks.

Day In and Day Out

Pre-and Post-retirees face a litany of questions. Retirement specialist are tasked with assisting and addressing the concerns and helping determine what solutions are in the best financial interest of you the client. One of the keys to determining this is helping them understand how retirement vehicles like fixed index annuities can work for them day in and day out retirement.

Mark S. Gardner is a Managing Partner for RetireWellDallas. He has spent over four decades helping families with tax-advantaged strategies whether it is money management, annuities, life insurance or Social Security claiming strategies. Certified in Social Security Claiming Strategies (CSSCS) designation.

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About Author

Mark S. Gardner 5307 E. Mockingbird Lane. Suite 900, Dallas, Texas 75206 Mobile: 214-762-2327, [email protected]

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