So, why is it that some Boomers and the older generation don’t take precautions to avoid “financial flues?” I think that many of us have the fear of missing out. You know, missing the rise in this great Bull Market. Well, we are going through a little bit of what the market always does. It is never a straight and endless shot to the moon. There will always be corrections. Before I continue, I will state again that I am not giving investment advice. I love the market, and I am still pretty heavily invested. But, I continue to change the make up of my portfolio as I get older and look towards the date when I will start making withdrawals. Yes, I have become more conservative and happy not to be as exposed to losses. But, is there a way that the soon to be retired, or now retired can still get above average interest rates, have money linked to different indices and have an income that they can’t outlive? Of course there is. Let’s review this option.
This is a simple answer. Tax deferred annuities. There are many flavors. You have a stated rate guarantee for 3-5 years… called a multi-year guaranteed annuity. This are for people that are desirous of a product that usually provides a rate higher than most bank cd’s. You have read about immediate annuities. This provides a stream of income from day one that will be there forever and never change. Fixed Index annuities provide interest credits linked to an index. You have a cap, so you won’t be hitting home runs. But, you will never lose a penny of principal or previous gains in a market turndown. Some have income riders that allow the insured to turn this product into an income annuity. But, you are not locked in and you can start and stop.
Finally, I know that most of the people reading this know all about these products. There are some agents who refuse to sell annuities. They speak of nose bleed fees, commission etc. And, they say that if you have “at least $500K to invest,” give them a call. I like the fact that we can help the vast majority of Americans that might not have $500K to give us. So, this is but a refresher course for most of the readers. This is not to be used in a sales situation, because you need to show surrender charges, terms etc. But, ladies and gentlemen… we have the products to protect our clients from the next financial flu. Have questions? Give us a call as the doctors are in the house.
Until next time… good selling!
Raymond J. Ohlson, CLU, CRC, LACP
President and CEO of The Ohlson Group