My first experience in the industry was the idea of “buy term and invest the difference,” and everything during your retirement years would fall into place and one would never run out of money. Not a bad thought, yes? I discovered that the invest part was not being done, and folks were getting close to retirement with no accumulation. This certainly created another bubble for these families. What might be the solution?
I personally think the government knew that if the employees of America would fund this program that due to the largest generation in population that one day there would be trillions of dollars in this vehicle, and, through taxation, they would be able to fund government spending and keep the government in operation. Think about it, there is only one place that holds enough money to fund our current debt as a country, the ERISA backed 401ks.
Will our government intervene into our ERISA backed retirement plans? According to recommendations by Theresa Ghilarducci and some of the congressional leaders, it has been suggested. Could it happen? You make the call.
Look at this way, if you had a large corral and the gate was open, and outside the gate, surrounding the corral, were millions of cattle you wanted to get fat for market. How would you get them to enter the gate into the corral? That’s right, by enticing them with food inside the corral. Eventually, you could get all the cows inside the corral and shut the gate. Once the gate was closed and the cows could no longer leave, you could get them as fat as you wanted. Once they reach their slaughter weight, as the rancher, there is no limit to what you could do to the cows. Is this not the characteristics of the 401k? Could the rancher be our government? Could the cows be the American public? Could there be a slaughter in sight?
These are all questions every individual needs to ask. When I ask a client sitting in front of me how their cow is doing, I see some of the most interesting faces. After the initial shock, I begin to explain that everyone has a COW—some are small, some are in the middle, and some are very large. Their “COW” is their “Circle of Wealth.” Working primarily with retirees and pre-retirees I feel the best vehicles to utilize are annuities. However, understand there is no shoe that fits everyone. I usually ask two questions that tell me what vehicles to use.
1) Is this money for you or someone else?
2) Do you want to use the money now or later?
Based on the answers, the products are chosen. It may be a fixed annuity with a guaranteed rate for a certain number of years, an indexed annuity using the upside potential for continued growth, or maybe a variable annuity if some risk tolerance can be taken. It may mean laddering annuities to stagger income for years to come, or possibly using a SPIA for immediate income and allowing other annuities time to grow. There are so many different ways to use the annuity product that the need for market securities for a retiree is almost exempt. I rarely see the need for any risk to be taken because of the options available using annuities.
About the Author:Robbin Broome is acting President of Robbin Broome, Inc. and has been in the financial services industry for 30 years. He uses a holistic approach to planning using insurance products and securities to better the lives of his clients. Robbin primarily works with retirees and pre-retirees, preparing them for their retirement years.
Robbin is a published author and his book Living A SMART Lifestyle Financially can be found on Amazon and Kindle, or you may get a copy by calling the office at 864-859-4778 and requesting. He also has a weekly radio program called The SMART Lifestyle.
Robbin is very active in giving back to the community. He is active with the homeless in the Greenville, SC area. He is also active in his church as well as other civic groups. Our focus is to “Help individuals and families to live a life of pro-action and not a life of reaction.”
If you would like to contact Robbin Broome for a risk free analysis or learn how to maximize your Social Security income, call 864-859-4778 visit www.thesmartlifestyle.com.