What would you guess is the number one reason why people decide not to purchase a fixed index annuity with an income rider as part of their overall retirement income plan? It’s not because of surrender charges, fees, or lower returns. It’s because the benefits of a fixed index annuity with an income rider simply sound too good to be true.
Retirements are like snowflakes; no two are going to look the same. Some people dream of a retirement that’s full of adventure and travel, while others imagine their retirement surrounded by family and good books. And just as there are many ways to envision retirement, there are multiple types of retirees, too.
Nancy K. Schlossberg, author and former counseling professor, discovered throughout her work that there are six main types of retirees. Read on to learn more about each one – and to determine which type of retiree you may be.
Dan Ahmad and Jim Files of Peak Financial Freedom Group recently sat down with “Your California Life” to discuss what they see as the biggest mistake retirees make when it comes to their finances. They also provide insight into how you can smartly manage your investments and mitigate risk in your portfolio as you approach retirement as well as once you’re in retirement. Watch the whole interview here, or learn more about Dan and Jim’s golden rule for assessing financial risk here.
The following content has been adapted from Chapter 24 of Momma’s Secret Recipe for Retirement Success, by Dan Ahmad & Jim Files.
For many people, money is scary. It produces anxiety and many other powerful emotions, too. Oftentimes, the root of fear or anxiety is that you don’t truly understand your finances. You may even blame yourself for your “lack of financial intelligence.” However, we believe that for the overwhelming majority of retirees, the confusion and lack of understanding have nothing to do with personal shortcomings. If you feel confused and don’t understand your money, it’s because you don’t have an actual plan in writing.
You can’t suffer a big loss to your savings now you’re retired or nearing retirement, you might not make it up, and you could run out of money. Most retirees we meet with are taking far more risk than they thought and could lose twenty to fifty percent of their savings. Even if you have a diversified portfolio, you could lose a lot, so you should have a risk stress test on your portfolio. You need to know how much risk you’re taking right now before you suffer a big loss because then it would be too late.
What does the phrase “safe income withdrawal rate” mean to you? Most people would answer, “the amount of income you can withdraw from your assets without the fear of running out of income during your lifetime.” This seems cut and dried. But you have to look at what the word “safe” means to different people.
“Safe” to some people might actually mean “safer than something else,” such as you stating that you are “driving safe” because you are going 80 miles per hour while everyone else on the road is driving 90 miles per hour, but the posted speed limit is 65 miles per hour. And then, “safe” to other people might mean the chance of anything negative happening is 0%. In planning for retirement, safe better mean safe, something you can count on for sure. Safe better not mean “kind of safe.”
Once you retire, that consistent paycheck that you’ve been depending on your whole life suddenly disappears. Now is the time to look towards all of those assets that you’ve saved and turn them into a new kind of income. Finding a way to do this, and ensuring that you’ll have enough income to last your entire retirement is one of the biggest fears that retirees struggle with as they plan to retire. This week on the Peak Financial Freedom Show, Jim and Dan are here to help teach you the basics of generating income in retirement.
When having a financial advisor, it can be tempting to take a back seat with your finances. However, no matter who you have in your corner helping you, it’s still crucial for you to stay in control of your finances and what’s going on with your investments at all times. In this episode of the Peak Financial Freedom Show, Jim and Dan discuss why it’s so important that you’re steering your financial advisor and not the other way around. Nobody knows what’s best for you, your financial reality, and your future dreams as well as you do, so be sure to stay engaged and alert as to what is happening with your money.
The best way to get to where you dream of being is to make a plan of what needs to be done in order for you to get there. Finances are no different. When it comes to getting ahead in retirement, having a comprehensive written plan that details how to get from where you’re at now to the retirement of your dreams can make all the difference. With a written plan in place, you’ll be able to better gauge your success and be more apt to hold yourself responsible, ensuring that you stay on the right path.
When it comes to business relationships, people have different kinds of friendships and partnerships, but what does that mean for your relationship with your advisor? Because an advisor is someone you’re depending on to help set yourself up for success in retirement, you want an advisor that you can trust and rely on. In this episode of the Peak Financial Freedom Show, Jim and Dan discuss what role your advisor should play in your life and why you may not always love the financial advice you hear. Then, later in the episode, Jim and Dan show you how creating never-ending income in retirement may not be as outlandish of a dream as you may think.
