Can your stomach take it anymore, this year the market has been down and then up and then down again. Your retirement portfolio principal is at risk, and you need it to plan your income for life after your leave your job. How do you plan your retirement with such volatility to your principal in today’s market?
I have a couple of strategies to discuss with you. You should be receiving your annual report from the US Social Security office. This annual report tells you how many years you paid into the social security fund. The report also shows your monthly income when you apply and trigger your social security payments, these are your payments for life. This is the guarantee from the USA Government and you should be able to find security in that.
However, you also need to supplement that income from your retirement savings. Over the years you have been putting money away in your IRA or company 401K plan. If you have been self-employed you have used other savings vehicles. Good news these plans have grown tax deferred. Bad news, now it’s time to start to pay the tax man on the growth. Insure your golden years and enjoy the days to come, but will you have enough?
If you are starting to do some smart retirement planning then you have to find a way to secure your retirement investment principal. You need to decide what portion of that money you can leave in the market and out of your control. The market is controlled by many factors, too many to list here in this article. But what if you can’t risk any of your principal, you can put aside and insure the principal and take advantage of any upside without any downside risk to your principal.
This is the concept of the insurance product call an equity index annuity. The insurance company guarantees your principal and payments for life, you can’t out live your money. The insurance company also insures your up and downside of the principal. You participate in the upside if the market does good, but you will never lose your principal if the market goes down.