50+ Lifestyles

The Value of Safety

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

The roller coaster ride for those aboard the stock and mutual fund markets continues. You hear me say continually, “None of my clients have lost money.” I continue with that statement. We only provide fixed and fixed index annuities for clients that provide income while maintaining principle with our split annuity strategies. I do not offer securities, mutual funds, or variable accounts. I voluntarily surrendered my securities license several years ago.

I’d like to share with you a couple client examples. I have a 62-year-old client that came to us originally in 2004. At that time, she was retiring with a nice employer pension plan and social security. In addition, she maintained a 401K plan. As a single retiree, she indicated that monthly income from pension and social security was adequate and would not need to draw from the 401K plan, but she wanted to make sure the plan would be available when needed later in life. Remember what was going on in the investment world in 2004 – the year she retired. Allow me to refresh your memory. Remember, too, the years 2000, 2001, 2002 – years immediately before her retirement. These were the three consecutive years the stock and mutual fund markets lost considerable value. In 2003 and again in 2004, we had some recovery. When my client retired, she was concerned with additional market downturns and the resulting affect on her 401K balance. We recommended she rollover the 401K value to an IRA funded with an index annuity. Following our recommendation, the 401K balance was approximately $48,124. Her annuity balance today is approximately $56,245 following a couple withdraws during this period. The yield to date on this annuity is 8.1 percent. More important than yield is the fact that our client has not lost any value. Nothing lost in these recent drastic market downturns. Nothing lost in these last three months of extreme volatility.

Folks, this client is an example of the type of security we provide for our clients through our annuity strategies. I firmly believe when a person is retired or soon to be retired, valued retirement money should not be subject to risks…. such as stock market declines. Valued retirement money needs to be safe from these risks. That’s the value of the fixed index annuity.

Another client of ours just renewed his index annuity that he contributed $18,000 non-qualified money in 2004. Current value is $22,669. Yield to date is 3.35 percent. Again this client has not lost money with these terrible last couple months. This annuity is somewhat different from previous client but fact remains – no losses incurred.

Annuities are designed for longer-term investments. Annuities have holding periods that may range from as little as four years to as high as 16 years with some flexibility for withdraw during holding period. Annuities like all financial products have benefits such as the guarantees and safety. But, they also have disadvantages too. It is important to consult with a financial professional that understands both.

The bottom line on annuity strategies is safety from market volatility. That is the value of the annuity. The bottom line on the index annuity is potential for stock market gains but no risk for losses.

Reminder to all – the annual enrollment for Medicare began Oct. 15. Enrollment period begins earlier this year and will end earlier this year. Ending annual enrollment is Dec 7. That’s a big change!! If you are a Medicare Beneficiary and wish to change your choice of plans for 2012 – remember these time periods.

Enjoy the remaining days of this beautiful fall season. Happy Thanksgiving.

Richard J. Schillig, CLU, ChFC, LUTCF is an Independent Insurance and Financial Advisor with RJU and Associates, Inc. He can be reached at
(563) 332-2200.