50+ Lifestyles

Take Control by Taking Action

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Employee Benefit Research Institute reports 47% of Americans between the ages of 56-62 would run out of the funds necessary to pay for basic retirement expenditures if they retire at age 65. 47% – that’s a big number!

BTN Research counted the numbers from 2000 to 2009 and tells us the S&P lost 9.1% (total return) in calendar year 2000. Further – the S&P lost 9.1%in aggregate (total return) for the last decade 2000 to 2009.

Thus the total return for the S&P for the 9 years 2001 to 2009 is zero. The US Government reported last week a $68 billion deficit for June 2010. This makes the 21st consecutive month the Government has spent more than it has received in tax receipts.

Now that we are well into the 3rd quarter of 2010, there just doesn’t seem to be an end to the bad news. For current retirees and for those looking forward to being retired, these are very challenging times. What can we do? We can’t control our national debt. We can’t control the unemployment rate. We can’t control inflation or deflation. We can’t control low interest rates. We can’t individually control wars in Afghanistan and Iraq. We can’t control immigration concerns. We can’t control
consequences of the oil leak in the Gulf that is wreaking havoc on our environment.

All of this negativity really creates a depressing and frustrating time for many. I am here to suggest there are some things we can do to manage and protect our assets and our future safely. Here are some of the steps we can take. We can take control by taking action. What’s the action? Let’s review some of the actions I encourage you to take to get control.

First – Whether now retired or soon to be retired, make sure your total retirement nest egg follows the Golden Investment Rule.

Remember this ‘rule of thumb’? Subtract your age from 100. The result is the percentage of total assets that should be invested in the stock and mutual fund markets – the balance should be in safety – a 60 year old – from 100 is 40%. This means, according to the Golden Rule of Investing, no more that 40% of assets should be in stock and mutual funds. At age 70 from 100 results in 30% – no more than 30% of assets should be in stock and mutual funds. Age 80 – according to the Rule – means that no more than 20% of retirement assets should be in stock or mutual funds.

I am not sure an 80 year old should be in stock or mutual funds at all, but with today’s life expectancy there could be some support for that one.

Now remember this Golden Rule is a guideline only. The Golden Rule is a ‘rule of thumb.’ Individual circumstances may make a significant difference. But the Golden Rule is an “action” we can take to help us get control of our assets. It is something we can do.

Another action you can take to help get control of today’s crazy world’s impact on our lives is take advantage of the benefits offered by insurance company fixed and fixed index annuities. Split annuities properly arranged can maximize income. Split annuities properly arranged will maximize income and maximize income safely. Take action by finding-out if this arrangement is beneficial for you.

The key to the index annuity used with the ‘split’ arrangement is the annuity’s value is guaranteed and does not decline even with negative stock and mutual fund declines. Guarantees are backed by the financial strength of the issuing insurance company. Your action folks is – to find out about these advantages and remember to look at the disadvantages too. I believe in the properly arranged annuity portfolio. I believe these portfolios have more advantages than disadvantages. I believe these are very appropriate for today’s times.

Another action to take now is to consider the Roth Conversion opportunity. We encourage you to look into this option and determine if appropriate. With 21 consecutive months of government spending exceeding income, tax increases have got to begin. Roth Conversions may help alleviate that tax increase and NOT impact our income. These conversions could be appropriate for persons already retired or appropriate for future retires.

Folks we are in the business of managing and protecting assets
especially valued retirement assets for our clients. Please call on us to determine if these actions could be appropriate for your situation. If already retired, these actions may help keep you retired.

If you are still working and looking forward to retirement, these actions could help make that plan a reality. Looking forward to hearing from you.