What Do You Want Your Retirement Money to do For You?

When I ask my clients what they want their retirement money to accomplish, I usually get three common answers:

1. I want my money to be safe.
2. I want my money to grow.
3. I don’t want to outlive my money.

 I meet people all the time that tell me they are terrified of the idea that they may outlive their money.Baby boomers and retirees are not willing to risk their retirement money in a market downturn because of the cyclical nature of markets. So many factors contribute to the market’s volatility, factors entirely out of our control.Another thing baby boomers tell me is they have no pension plan from their employer, which has become increasingly common as companies look for ways to reduce costs and increase the bottom line of their balance sheet.  Most have a 401(k), 403(b), or IRA. Many have other investments that they created through saving and other methods.Many have watched their retirement funds go up and down with the market throughout their careers. When they were younger, they had time to recover from any losses due to market losses. As they near retirement, they no longer have time to recover.So they turn to safe money options such as bank CDs, savings accounts, and money market accounts. These savings vehicles' challenges are exposure to low-interest rates, prolonged growth, and the risk of outliving their money.Another danger to consider is Inflation; from 1926-2010, inflation averaged over 3% annually. Allow me to put this into perspective.  Albert Einstein came up with a formula called the rule of 72. Interest earned on money divided into 72 equals how many years it will take for your money to double. 100.00 dollars earning a 7% interest rate divided into 72 equals 10.2 years, meaning your money will double in 10.2 years to 200.00 dollars.Let’s assume that a person’s monthly cost of living is $5,000.00 today, and the annual inflation rate is 3%.  3% divided into 72 equals 24, which means in 24 years, we will need 10,000.00 dollars to keep up with our monthly cost of living.Is there a solution?Absolutely!For those looking for the safety of principal, potentially growing your money without the risk generally associated with investments such as stocks, bonds, mutual funds, variable annuities, and an income that cannot be outlived, consider a fixed indexed annuity (FIA). An FIA is one of the safe money strategies I use to address all those concerns.Unlike variable annuities, which have exposure to market risk and are loaded with fees. A fixed indexed annuity is a fixed annuity. The critical difference between a traditional fixed annuity and an FIA is how your interest (or annuity yield) is credited. A conventional fixed annuity credits your account with a stated interest rate; a fixed indexed annuity links your interest rate to the performance of a leading market index.FIA provides specific benefits such as participating in market gains but never market losses.Fixed Indexed Annuities provide these benefits:

• Your money grows tax deferred.
• You may avoid the cost associated with probate by naming a beneficiary.
• They are liquid through penalty-free withdrawal provisions.
• You can receive a guaranteed income for life no matter how long you live.