Retirement Planning: Income for Life

Retirement Planning: Income for Life

When planning for retirement you must consider the two phases of your savings plan: the accumulation phase and the liquidation phase.  It is not only important to systematically save and invest for retirement; you must also plan to ensure that you do not out live your retirement monies.  Ensuring that you have adequate funds to support you for your entire life is an increasingly difficult challenge.  As life expectancies increase, cost of living increases, and tax rates remain uncertain it is increasingly more important to ensure that you have a guaranteed income stream which you can never out live.  Fortunately public demand has created a financial vehicle known as a Deferred Annuity.  Annuities will allow you to enjoy tax benefits and principal protection during the accumulation phase of your retirement plan and guarantee you an income source for your entire life during the liquidation phase of your retirement plan.

Phase one of your retirement plan consists of saving monies and investing them for retirement.  When saving and investing for retirement it if important to invest conservatively and take advantage of any tax benefits the market may offer. Investing conservatively does not mean necessarily capping your earning potential but does mean protecting yourself from any principal loses.  The later you are in your life and investment cycle the less you can afford to be exposed to any loses in your retirement portfolio because you do not have the income or the time to recoup those loses.  Annuities have the ability to guarantee your principal and ensure that regardless of what happens in the stock market that you can never lose a single dollar.  Annuities also provide you with tax deferred earnings.  Tax deferred earnings allows your entire account’s earnings to remain in your investment and continue to compound.  Most investments outside of a qualified plan are not tax deferred which means that you have to pay taxes every year on the earnings you gained that year and this of course means that you then have less money invested for the next year.

Phase two, often the most important phase, is liquidating your retirement account.  When planning for accessing your retirement money it is vital to ensure that you do not out live your retirement savings.  Today it is increasingly difficult to ensure that your retirement savings will result in adequate income for your entire life.  As life expectancies continue to increase and as cost of living continues to increase it means that you will need more income for a longer period of time than many people imagine.  Many annuities offer guaranteed income for the rest of your life.  An annuity with a guaranteed income for life option will ensure that you will have a predictable and continuous income stream no matter how long you live.  One of the biggest financial fears of seniors today is becoming a financial burden to their loved ones.  An annuity with a guaranteed income ensures that you will always have your own source of income which will never run out.

There numerous types of annuities which provide you with the safety of principal protection and tax deferred benefits during your accumulation phase and guaranteed income for life during you’re the liquidation phase of your retirement plan.  It is important to work with a trusted licensed life insurance agent when researching the market and selecting the annuity to best meet your retirement needs.  As Ross Perot said about retirement planning “The hardest part of starting, is starting.”