Monday, 17 September 2012

Safety Options For Retirement Income Generating Assets

Safety Options For Retirement Income Generating Assets

By Keith Dennis

If you are looking for some safety options for your retirement income generating assets then keep reading. You should never risk your retirement income generating assets. Although the market is up right now there is no guarantee it will keep growing at its current rate or stay up.

With gas prices so high and an election year coming there is good reason to start seeking out safety options. There is no need or reason to risk your retirement income generating assets. But what do you invest in instead of risky market investments?

Market investments have their place in most people's portfolios. The problem comes in when they are used as the primary instrument to generate retirement income. What happens when the market goes down and you are taking income from your investments? You end up in a bad situation where you are withdrawing out a much larger percentage than you intended to before the market downturn.

Bond investing is almost as risky but not quite. The interest rate of a bond will stay steady when the bond market is not faring well. The main problem with bonds is that companies occasionally go out of business and an investor can end up losing their money. Stick to large company bonds with good ratings to help avoid this kind of risk.

The other issue with bonds is call dates. A company that calls their bond early is usually planning on reissuing the bonds at a lower rate which means rates are lower. You get your cash back and then have to invest at a lower rate and get lower income. What is left?

One Safe Solution That Does Not Fluctuate In Value

Annuities can offer guaranteed income with potential for market like growth as well. Keeping up with inflation is vital when setting up your retirement income. Annuities can provide the safety you need along with the income that you require.

Annuities are safe investments. Specifically, fixed annuities and fixed index annuities are safe. Variable annuities will fluctuate with the market and that is not what we are looking for. Fixed annuities do not go down in value.

Annuities are also guaranteed by your state insurance guarantee fund up to a certain amount. Be sure to research your guaranteed amount before investing, better safe than sorry. Usually the guarantee is somewhere around $300,000 in cash value of annuities per insurance company. Check your state's guarantee to make sure. When you find the numbers then be certain to never go over that amount. It is rare for an insurance company that issues annuity to go out of business but it has happened.

Fixed index annuities also offer lifetime income guarantees without annuitizing. You can retain access to your principal while being guaranteed a certain income stream. It is an amazing concept to think that you won't ever have to worry about your retirement income again!

Take a look at annuities as a safe retirement income solution. Be sure to go over all of the details and thoroughly understand what you are getting. Make sure to know how it benefits you and how you can take your money out when you need it. Never risk your retirement income generating assets!

Disclaimer: Always seek individual advice from a licensed professional. This article is for general information purposes only and is not a substitute for personal advice.

Keith Dennis works exclusively with small business owners to help them create tax-free income streams for retirement. Business owners are often stuck in the tax-deferred investment trap. They get a small break now and then end up paying much higher taxes later because they lose their business deductions. Then on top of that, their income is usually 100% taxable!

With tax-free investing you can literally have twice the income in retirement saving the same amount of money, retire sooner, or even save about half as much versus tax-deferred investments.

Get it touch with Keith today to learn how it works through the Small Business Retirement Group's Fan Page.

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