There are those who believe annuities are sold to senior citizens who did not understand what they were buying or the contractual ramifications of their decisions. This is not the fault of the senior citizens…it is the fault of the agent who thought more about himself instead of the needs of the client. When I began my career in financial planning, I made myself a promise: “Never sell a product to a client that doesn’t fit their financial needs.” I was, and still am, true to that promise.
There are those who believe in the blanket statement that annuities should not be purchased by anyone over 70…that is
In the world of financial planning and investment advising there is a need to have safe money options regardless of age. The key relies on the fact that the financial product should provide a solution to a financial need.
“Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Annuities by their name are designed to be income producing financial instruments. They may also be very effective as estate planning tools. Unfortunately, bureaucratic regulators have limited the purchase of annuities for senior adults approaching or exceeding eighty years old. Why wouldn’t someone in their eighties not be able on their own or with the consent of their families purchase an annuity when they want safety of principal, a higher growth potential than the local bank, a 5% to 10% bonus and all of the account value to bypass probate and go directly to their heirs with no surrenders or penalties? The main reason is that senior citizens are discriminated against by overzealous regulators that in the name of protection have caused the door to be shut on this legitimate purpose for annuities in estate planning.
Age limiting also applies to younger individuals. Some insurance companies pull back on benefit eligibility for younger individuals which seem to “promise too much” based on today’s interest rate environment when these benefits are extrapolated out over a younger person’s lifetime.
What is the best age?
The most common age seems to be between 45 and 65, but it depends on the type of annuity and your planned retirement age. Often, people in their 40’s delay making plans for their retirement…delaying those important decisions until later. This is the age when retirement planning should be given priority in looking forward to those retirement years. However, it is most common for any formal retirement planning to begin 1-15 years prior to retirement. Annuities excel at keeping retirement dollars safe and secure while providing growth for retirement income. The reasons for future retirees considering annuities for their income foundation or “if they cannot afford to lose principal” or if they “do not have time to recover from losses in riskier financial choices” —then annuities are always prudent alternative for consideration.
If you don’t have a financial profession, search for one that will listen to your needs and then work with you to find proper solutions. The decisions you make on what to do with your dollars are ultimately your decisions. Work with someone who has your goals in mind and you have a much better chance of meeting your retirement target. Part of that target or goal should include remaining retired after your retirement date.
In my last blog I mentioned "putting it all together" in woodworking and/or building a retirement plan. The finished retirement plan is much like the finished plan of a woodworking project. In both cases, the outside represents the finished project. Therefore, in order to have a successful plan, we cannot begin with the outside. We must start and build from the inside to the outside.
When we begin "putting it all together," we start to see how all the parts work together as we examine the framework of the plan. As we build from the inside to the outside, can easily see that more work is needed to develop the plan. In the case of a woodworking plan, it is much easier to apply paint during the development stage. It's difficult to paint all the nooks if you wait until the project is finished. So, a little paint is needed before the inner parts become difficult to reach.
In retirement planning the development stage is called "the accumulation period." A woodworking plan can be finished in a short period of time, but "giving attention to the inside" of a retirement plan is continuous during the accumulation period until the desired retirement age is reached. Great care and attention to the working parts of a retirement plan is important not only during the accumulation period, but during retirement to make sure the retiree is able to remain retired. A retirement plan must not be so rigid that it doesn't have the flexibility to make adjustments as economic and personal circumstances change. I call this "liquidity management." This is the ability to take advantage of opportunities during the accumulation period.
In retirement planning, many people "put off until tomorrow what they should do today." Procrastination is the worst enemy of the person wanting to retire some day. Many believe that retirement will take care of itself because they will have Social Security Benefits. Social Security Benefits are meant as supplementary income for what is accumulated through saving for retirement. If you are depending entirely on Social Security Benefits, you need to visit my website and complete the Contact Form. This is one of those "don't put off until tomorrow what needs to be done today" actions that will start your plan for retirement.
My approach to retirement planning is very similar to “putting it all together” in planning a woodworking project. First, it’s essential to have a vision…what is the goal and how do you obtain it.Once you have the vision, it’s time to get excited about planning for the end results. With retirement planning, what are the current resources and what will be needed to reach retirement and remain retired. Many people, without proper planning, reach the age of retirement and discover their retirement planning should have included a lot more “putting if all together.”
“Putting it all together” is not a one-time thing. From the beginning of your planning, it’s necessary to always be
“putting it all together.” This is where retirement planning and planning a woodworking project differ. During the accumulation period of prior to retirement, it is necessary to periodically “tweak” your plan to meet your goal due to unforeseen events not considered at the onset of your plan.
The furniture project I am working on currently required a little “tweaking.”
When sanding and sizing the pieces for the drawers, I discovered that I had not followed the rule for measuring and sawing. Out of the 32 pieces for the eight drawers, one of the drawer fronts was cut 1″ to short. I am reminded of measure twice and cut once rule (even better is measure 3 or 4 times and cut once). This came during the “putting it all together” phase of my project. When working on a project without a detailed plan, it is necessary to draw my own plans. I have found that on most projects it is better to NOT cut all the parts in the beginning. This is an opportunity for disaster. If, in drawing the plan, one measurement is wrong brings on a lot of heartache.
The error in my measuring and sawing mentioned above, is the reason I never use a “cookie cutter” retirement plan….once plan fits all. When there are no provisions for a change in goals and circumstances, with the flexibility to allow “tweaking,” makes the plan subject to disaster and a short-fall when the age of retirement comes. It may be necessary to delay retirement and/or find a source of supplemental income.
My goal for clients is to assist them in reaching their retirement goals and being able to remain retired
Two of the things I enjoy a great deal are developing retirement plans for clients and woodworking projects for some very special people. Don't misunderstand me...my clients are all very special people too. I've been developing retirement plans and woodworking for many years now and am always excited when doing both.
The approach is the same for both endeavors. In developing retirement plans, there are no "cookie cutter" plans. No one plan fits each client and must be developed with the flexibility to make adjustments during the accumulation phase of the plan. Without a well-planned accumulation phase, the retirement goals in most cases will never be reached. With flexibility and continuous review, it may be necessary to "tweak" the plan as retirement funds are accumulated to the time of retirement. A successful retirement plan eliminates the "shock" of arriving at your selected retirement age and realizing your retirement date must be postponed or you won't be able to "stay" retirement and need to get a job to supplement your retirement funds. Social Security retirement benefits, while included in your planning, will in most cases be insufficient to fund the retirement you've dreamed about for many years.
One very important thing in being successful on a woodworking project is measure twice and cut once. I am conservative in both retirement planning and woodworking. I allow the flexibility to "tweak" and retirement plan and I often measure three or four times before making a cut in woodworking. After making the cut, it's very difficult to attempt to "tweak" for a board that was cut too short. The result often leads to a waste in very expensive lumber and a pile of scraps that may be used in another project...or unfit for future use.
I have started a new project for my wife and I want it to be perfect when completed. I will be showing the progress in future blogs if you want to follow to find out what the project is. Let's hope my scrap pile doesn't grow or there will be no necessity for "tweaking" as I continue to measure, measure, and measure and make each cut successfully.
If you are interested in developing a successful retirement plan or "tweaking" the plan that you already have...or maybe even making adjustments after you have retired to make certain you may remain retired...visit my website and complete the "contact" information and receive a prompt reply:
I have also discovered the hard way that following God's plan for me requires a great deal of "tweaking" to the plans that I have for my life. It's a great feeling when I make adjustments in my plans to agree with the plans God has for me.
Retirement and/or remaining retired doesn't just happen. The people looking ahead to retirement have a major challenge on their hands. Not only do they have to convince all those affected, but they have to plan the whole process.
For many years the following acronym has helped people to think through their plans whenever a major challenge or opportunity approaches:
As an investor, one of your main goals is, of course, building a nest egg for your future. This will involve not only making difficult decisions at times, but also learning a bit about investing itself so that you can make those decisions wisely.
You, as an investor, must develop your philosophy as an investor and act consistently as a investor and not as a speculator. The goal of speculating is to achieve a large gain in a short amount of time. Speculation involves a large risk in nearly all circumstances because, as we always say, if something seems too good to be true, it probably is. That's not to say that speculating can't pay off; it can, but the trade-off for potential large, quick gains is usually a considerable risk of loss.
By contract, investors commit to a long-term strategy based on sound investment principles. An investor also seeks to gain money, of course! But the focus is on the long view, not the short-term, fast gains.
Future retirees and those who are already retired need to put in place a team that will work to achieve the goals desired. This team should include the individual as well as a financial advisor, a CPA, and an attorney. This will accomplish the planning ahead that is necessary and also aid in the continuing monitoring of the process of reaching retirement.
Burrows Financial works every day in planning and monitoring retirement plans for individuals who want a plan that works. We strive to eliminate the risks to ascertain that the retirement goals are achieved. If you don't have a team in place, I can be of assistance in forming a team for you. It is never too late or too early to ease yourself of the worries and concerns by setting goals for your retirement.
No question about it, Moses had a major challenge on his hands. Not only did he have to convince everyone...including Pharaoh...to let him lead the Hebrew slaves out of Egypt, but he had to plan the whole process. To mobilize his countrymen he first had to organize them. That required shrewd planning. He had to plan ahead...not lead from behind.
Have a great day!