#1 For Life And Retirement Strategies Tip of the day! Secure Retirement Income Streams

How annuities can provide a secure retirement                            income stream

#1 For Life And Retirement Strategies Tip of the day!
https://www.google.com/+VasiliosVossSperos 602-531-5141

If you're retired and you use traditional withdrawal strategies, you probably ask yourself the following question each year, "Should I withdraw 4%, 5%, or 6% of my investment portfolio value?"

This question is often accompanied by one or more of the following six questions:

• Which portfolio value should I use to calculate my withdrawal amount — the value when I retired or the value at the end of last year?
• Should I increase my withdrawals by an inflation factor, and, if so, how much?
• Should I really withdraw 5% this year after the hit my portfolio took last year as a result of the stock market decline?
• From which account(s) should I take my withdrawals — nonretirement, retirement, or both?
• How should I adjust my strategy when I turn 70-1/2 and am required to begin taking minimum withdrawals from my retirement accounts?
• Is it OK to withdraw additional funds this year to pay for a large onetime expense?

The unsafe withdrawal rate strategy

As a retirement income planner whose primary mission is to design and monitor plans for clients to provide sufficient after-tax income to pay for planned and unexpected expenses for the duration of retirement, the foregoing approach is unsettling.

In addition to creating confusion and uncertainty, not to mention complexity, the "safe withdrawal rate" strategy as it's commonly known, lacks the ability to generate a predictable and dependable amount of income in a given year to pay for retirees' fixed and discretionary expenses. Simply put, its reliability as a stand-alone solution for providing long-term financial security is questionable.

Match projected expenses with predictable income streams

The basic goal of retirement income planning is to match projected annual expenses with predictable income streams throughout one's retirement years. While there are several investment strategies that are touted for their ability to achieve this goal, including bond laddering, there's only one that can guarantee it, subject to the claims-paying ability of individual providers: fixed-income annuities.

For those of you who may not be familiar with it, a fixed-income annuity is a fixed annuity that provides either lifetime payments or payments over a contractually-defined term. The start date of the payments may be either immediate or deferred, depending upon whether an immediate or deferred annuity is used.

Unlike the safe withdrawal strategy which lacks the ability to provide known and predictable income in a single year, let alone for the duration of retirement, fixed-income annuities are designed for this purpose. In addition, the income amounts and timing of same can be precisely defined at the time of investment.

A flexible and potentially tax-favored strategy

A plan using multiple types of fixed-income annuities with different start and end dates and income amounts, adjusted for inflation and projected income-tax liability, can be structured to dovetail income with projected after-tax expenses, the annual amount of which can vary over different stages of retirement.

Income flexibility can be incorporated in the plan by including fixed-index annuities with income riders and deferred-income annuities, or DIAs, that offer a flexible income start date. Nonqualified, or nonretirement, DIAs are often used since a portion of their payments is excluded from taxation.

Part of a total solution

Unlike the safe-withdrawal strategy which is an all-or-nothing solution, fixed-income annuities are generally part of a retirement income plan.

The choice of types, as well as initial and ongoing investment amounts, can be optimized to use the least amount of investment assets to provide a targeted amount of income to meet projected expenses during different stages of retirement. By doing this, assets will be available to meet unplanned needs and potentially be left to future generations or provide funds for charitable causes.

If your goal is to receive a secure predictable income stream to pay for planned and unexpected expenses throughout retirement, I recommend that you research the use of fixed-income annuities as part of your plan.

Vasilios "Voss" Speros 602-531-5141
Spence Cassidy and Associates
#LifeInsurance #RetirementStrategies
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— in Phoenix, AZ.