Do You Want Guaranteed Retirement Income?
by Gabriel Lewit
In retirement, the #1 challenge you will face is generating retirement income.
Moreover, how do you generate income that is secure, reliable, and consistent? How do you do this through uncertain and occasionally chaotic market conditions? How do you ensure you don’t run out of money?
These are some of the tough questions you will face when it comes to creating your own retirement paycheck.
But there is a bigger question at play… a much more important one… it’s a question that can have massive ramifications for your retirement security and enjoyment.
Want to know what it is? It’s whether your retirement income is GUARANTEED or NON-GUARANTEED.
Let’s dive in and see precisely why the answer to this question is so important.
What is Guaranteed Retirement Income?
Guaranteed retirement income is one of two core classifications of income in retirement. Let’s take a high-level, 30,000-foot view of these income types:
GUARANTEED RETIREMENT INCOME
- Income that pays you a steady monthly paycheck
- There is no market risk or volatility
- You can’t lose money due to market declines
- This paycheck lasts for as long as you live
- It can never “run out” of money to pay you with
NON-GUARANTEED RETIREMENT INCOME
- Income that you pay yourself when you need it
- Can be subject to market risk and volatility
- You can lose a little or a lot of this money (depending on risk)
- Once this money runs out, it’s gone
- Once it’s gone, you can no longer get any income from it
Having seen the definitions of the categories above, which of these two types of income would you rather have? Which one would give you greater confidence and enjoyment during your retirement years? On the surface, the answer to this question seems easy, right?
Why wouldn’t everyone choose the Guaranteed Retirement Income option? That’s an interesting question, and one that we’re going to continue to explore later in this post.
Where Can You Get Guaranteed Income From?
I have a feeling you might be asking this question in your mind… “Gabe, the Guaranteed Retirement Income sounds too good to be true. Where can you get that from?” The answer may surprise you…
The truth is, each and every one of us is already getting (or will get) Guaranteed Retirement Income during our retirement years. That source? Social Security.
Let’s take a quick look:
SOCIAL SECURITY INCOME ANALYSIS
- Steady monthly paycheck? ✔
- No market risk or volatility? ✔
- Can’t lose money due to market declines? ✔
- Lasts for as long as you live? ✔
- Can never “run out” of money to pay you with? ✔
Note – For this analysis, I am ignoring the risk of the Social Security Trust Fund running out of money. That’s a topic for a different day!
When you look at Social Security as a source of retirement income, everyone loves it! Sure, you might wish your SS check were a bit higher, but otherwise, it’s a terrific source of retirement income. One that millions and millions of Americans rely upon to fund their retirement.
But let’s say you want more Guaranteed Income. Where else can you get it from? Pensions.
Let’s take a quick look:
PENSION INCOME ANALYSIS
- Steady monthly paycheck? ✔
- No market risk or volatility? ✔
- Can’t lose money due to market declines? ✔
- Lasts for as long as you live? ✔
- Can never “run out” of money to pay you with? ✔
Note – For this analysis, I am ignoring the risk of the Pension Fund or Company running out of money. That’s a topic for a different day!
Do you know anyone who has a pension? They probably love it, right? In my practice, I’ve met hundreds of people who have pensions, and they are some of the happiest retirees you will see. Why? They have more guaranteed income. It provides them with a lifelong paycheck. Reliable, dependable, and steady.
But, if you’re like 96% of Americans who don’t have a pension, where else can you get Guaranteed Income from? Annuities.
Let’s take a quick look:
ANNUITY INCOME ANALYSIS
- Steady monthly paycheck? ✔
- No market risk or volatility? ✔
- Can’t lose money due to market declines? ✔
- Lasts for as long as you live? ✔
- Can never “run out” of money to pay you with? ✔
Note – For this analysis, I am ignoring the risk of the Insurance Carrier going out of business. That’s a topic for a different day!
When it comes to annuities, talk to anyone and you’ll get quite a different mix of reactions. Some people love them, some people hate them. Furthermore, they are one of the most misunderstood financial products in the marketplace. Either way, an annuity does fit the definition of Guaranteed Retirement Income.
Let’s take a step back and recap. So far, we have the following sources of Guaranteed Income.
SOURCES OF GUARANTEED INCOME
- Social Security
- Pensions
- Annuities
So, is that it? Are there any other options available to you for Guaranteed Income?
That’s a big N-O. That’s it. Just those three.
You’ve got Social Security, provided from the Government. You’ve got Pensions—if you’re lucky enough to have one from your Company. And you have Annuities, which you have the option of purchasing on your own.
Why Wouldn’t Everyone Have Guaranteed Retirement Income?
What’s interesting about Guaranteed Retirement Income is that nearly everyone says they want it. All the research shows that people with Guaranteed Income are happier. Guaranteed Income takes nearly all the stress and risk out of retirement planning—allowing you to truly relax and enjoy living during your retirement, instead of worrying about how much money you are spending.
Guaranteed Income allows you to completely avoid worrying about the stock market performance or losing money in the market. So why doesn’t everyone have all their retirement income Guaranteed? Isn’t that an interesting question?
Let’s take a quick look at why this is the case by assessing our only 3 sources of Guaranteed Income:
- We All Say “Yes” to Taking Social Security
Because you already paid for this via taxes deducted during your working years, taking this is now a no-brainer. It’s time to collect! - We All Say “Yes” to Taking a Pension
Like Social Security, you likely had a portion of your paycheck withheld for your pension, or nothing withheld at all. Either way, this is an easy decision. Send me the money! - Most People Say “No” to Buying an Annuity
Buying an Annuity? Most people say, “No Way!” Despite being the only other source of guaranteed income, annuities often are thrown by the wayside.
The issue for many people however, is that Social Security doesn’t provide enough income. And they probably don’t have a pension. That leaves your only choice for Guaranteed Income being an annuity, which most people never consider.
Why is that the case?
Why Haven’t You Considered an Annuity?
Do you like the idea of more Guaranteed Income? If so, why haven’t you considered an annuity?
Annuities—but it must be the right annuity—can be a great financial choice for retirees. Like anything, they have their pros and cons. But, more than nearly any other financial product, annuities have a widely misunderstood reputation.
Here are some of the many falsehoods that prevent most people from even considering them.
ANNUITY FALSEHOODS & MYTHS
- You lose all your money when you buy an annuity
- If you die, the insurance company keeps your money
- Annuities are loaded with fees
- Annuities are only good for the insurance carrier
- Annuities lock up your money
- Your money can’t grow in an annuity
- The insurance company is just paying you your own money back
- I can create my own annuity instead
- You can’t change your mind once you buy one
- Annuities pay agents 10% plus commissions out of my pocket
- And many more…
Annuities are given an unfairly bad reputation by Wall Street, by “Gurus” like Suze Orman, by competing Stock Brokers, by the press, and by many others. But most of the information parroted by these sources is heavily biased, factually incorrect, or highly sensationalized.
As a result, you are bombarded by these falsehoods and your brain absorbs this, ultimately saying “Nope, why would I ever buy that?”
While certainly not right for everyone, annuities are a particularly great fit for one type of person… someone who wants Guaranteed Retirement Income!
Remember, annuities are the ONLY product you can purchase that can give you the advantages of Guaranteed Retirement Income. There are no other options!
Let’s address and correct the myths we saw about annuities above. Here are some quick facts about annuities and, in particular, a type of annuity called a Fixed Indexed Annuity:
QUICK FACTS – FIXED INDEXED ANNUITY (FIA)
- You maintain full control your principal
- If you pass away, your heirs receive your full account balance immediately
- There are no fees to your heirs to receive your remaining balance
- Most FIAs have no fees at all, or very low fees for an optional “Income Rider”
- Annuities with the Income Rider offer a Guaranteed Lifetime Paycheck
- Your account value can never lose money due to market risk or loss
- You earn moderate to moderately-high interest on your money (4 – 6% typically)
- Your paycheck will continue for life, even if your account balance goes to $0
- You can move your money away if you change your mind
- The average commission is between 5% – 7%, and is paid by the insurance carrier, not out of your pocket
As you can see, most of the negative information you typically hear about annuities is wrong. It’s up to you to be a savvy consumer, sort through the noise and make decisions that are right for you.
Should You Explore an Annuity For Guaranteed Retirement Income?
If you like the idea of Guaranteed Retirement Income, and the security and confidence that it brings, you at least should explore the idea of an Annuity.
While complex, with hundreds of different types, products, and features, annuities can offer you the Guarantees, market-protection and longevity insurance that no other financial product can provide.
When buying an annuity, always ensure you are working with a Fiduciary who will put your best interests first, and always ensure you work with an independent organization that can access all insurance products to find the right annuity for you.
Lastly, ensure that the advisor or agent whom you’re working with gives you the complete details on the product you are considering, provides the pros and cons, provides you with the opportunity to ask any questions you have, and never rushes you into making a hasty decision.
Looking for information or guidance? Consider talking to us at SGL!
We can provide you with the options and details to make a wise and informed annuity purchasing decision. Give us a call today at 847-499-3330 to schedule a free consultation.
