Two types of annuities that I don't hate

This video is about two types of annuities that I don't hate: Single premium immediate annuities (SPIAs) and qualified longevity annuity contracts (QLACs). In this workshop, we discuss who these types of annuities may be for, who they're not for, and what you should think about before purchasing.

I personally do not sell annuities as I am a fee-only fiduciary adviser. But, if you have questions about retirement, if these types of annuities may be right for you, or any other financial questions, you can schedule a complimentary call I look forward to speaking with you.

Crossing the Bridge to a Satisfying Retirement

One of the more important—and hopefully enjoyable—events you will face in life is retirement.

After spending many years building your career, you have likely accumulated a comfortable nest egg.

If you have reached a point where retirement is the next big step, you need to develop a strategy that will help you cross the bridge from the world of work to the world of leisure.

While most retirement planning discussions focus on the financial aspects of securing a comfortable retirement, few look at the nonfinancial issues that need to be addressed.

Indeed, when retirees report being dissatisfied with retirement, it is more often the nonfinancial aspects they find troubling. Specifically, lifestyle changes and loss of self-esteem due to loss of work often create the most difficulties.

Perspective is Key

Maintaining perspective is really the key to enjoying one’s later years. While the word “retirement” suggests that something is coming to an end, cultivating a more positive view can help you learn to see retirement as the beginning of a new phase of life—a phase in which you can do all the things you never seemed to find the time for while you were working.

Volunteer work can enhance your sense of making a contribution, while taking courses in areas of special interest can challenge your intellectual curiosity. If thoughtfully chosen, these activities can bring a great deal of happiness and meaning to your life.

Easing the Transition

From a psychological standpoint, some individuals find that separating from a lifetime of work is a more emotional experience than they ever expected. It is possible that it may take from two to five years to disengage from the personal investment required of work-related activities.

One solution for dealing with these stresses is to slowly phase into retirement.

The fact is, many individuals wouldn’t mind continuing to engage in some form of work, either by consulting, job-sharing, acting as a mentor, or providing back-up management.

Mentoring, in particular, enables an individual to transfer his or her lifetime of learning and experience to a friend, relative, or younger colleague. Also, phasing into retirement can provide an “anchor,” while offering the opportunity to explore other activities.

Reexamining Priorities

Obviously, it’s a lot easier for retiring individuals to pare down their work schedules and begin considering other pursuits if financial considerations play a secondary role in deciding whether, and how much, to work.

Some people believe it costs less to live in retirement, yet many retirees may actually increase their expenditures, especially in the early years.

This is when individuals in good health may spend more on entertainment, dining out, travel, and recreation than they did while still working full-time.

During your working years, it is common to take your lifestyle for granted. During retirement, with more time available for reflection, it is both appropriate and wise to carefully examine how you have been living and to consider reordering your priorities.

You may find you just don’t need to do some of the things that seemed so important when you were working.

On the other hand, if you wish to maintain your pre-retirement lifestyle, you may need to consider your financial position carefully.

The best approach is to prepare a budget based on your adjusted income level and update it on a regular basis.

You will also need to keep an eye on inflation. At a 3 percent annual rate of inflation, an item costing $100 at age 65 will cost $156 at age 80.

Your ultimate aim is a retirement plan that will not only work for you “at” retirement, but will also carry you “through” retirement.

If you view retirement as an opportunity for exploration, you can help make this transition an exciting and enjoyable process. Your horizons are limited only by the bounds of your imagination. Through your hard work, you have earned this opportunity—enjoy the journey!


Investing In Retirement and 3 Big Mistakes to Avoid (Video and Slides)

(My ROUGH notes from the presentation)

Investing In Retirement

Investment Policy

A coherent set of guidelines for managing financial assets that are in line with your goals and the realities of the investment markets. 

This policy will provide overarching guidance on the implementation of: 

-Asset allocation

-Portfolio management, and

-Investment strategy

It should cover: 

-Risk tolerance

-Have a realistic rate of return based on your risk tolerance. 

Your Investment Policy

-Serves as the basis for developing, administering, and reviewing an ongoing program of investments.

-Think of your investment policy like a ‘compass’ that keeps you pointed toward your higher goals, and as a tool to drown out the noise and fear tactics of the financial media. 

-2017 was one of the calmest years for the stock market of the last 5 decades. 

-But, a normal year has about 50 moves of 1% or more in the market, or about 1 per week. 

There are times when investors lose their sense of direction.

-The Dow Jones has dropped 300 points!  Maybe I shouldn’t be investing in stocks? 

-The stock market has risen 15% in the last year, why do I have half my portfolio in bonds? Shouldn’t I shift more to stocks now? 

This is exactly why you should, and we do with clients establish a written Investment Policy Statement (IPS) so that when turbulent times come, we can go back to your IPS and remember why we are investing the way we are. 

The purpose of the investment policy is twofold: 

  1. To provide a foundation of goals, time horizons, and constraints on which the portfolio is constructed; and provide a basis for review, performance evaluation, and adaptation to changing conditions.

The only thing that is constant is change -Heraclitus

When you have a proper investment policy in place, and changes come, you have your compass to refer to before you make any irrational decisions. 

A sound investment policy is realistic, has a long-term perspective, and is clearly defined. 

3 Big Mistakes Investors Make in Retirement

They let FEAR be the dominant emotion when it comes to making decisions on what to do with their nest egg.

-They are worried about running out of money so instead of working with a qualified investment advisor that can deeply help them understand your risk tolerance, timeline and retirement funding needs, they put WAY too much money in an insurance product like an annuity. 

Annuities have the benefits of downside protection, but very limited upside. They will claim 2-4% returns but you have to remember there are fees that are subtracted from that many times over 1% that aren't explained very clearly in the annuity contract. 

You also lose control of the money. Say you put in 50% of everything you have, now you no longer have that money if there was an emergency or you needed medical care. All you get is your monthly payment. And most of the time those payments don’t increase with inflation. Over time those payments don’t keep up with inflation and you get less and less with your money each year. 

They OVERPAY for investment expenses. 

Large-Cap Stock Funds: 1.25%

Mid-Cap Stock Funds: 1.35%

Small-Cap Stock Funds: 1.40%

Foreign Stock Funds: 1.50%

Bond Funds: 0.90%

This would give you an average fee of 1.28% 

This may not include additional fees like 12b-1 fees that are hidden deep in the paperwork that can be .25%-.75% PLUS any front/rear loads that the broker takes as a commission. If they also charge you for investment management, the average fee 

This is typically ONLY for investment management. Or very basic financial planning. 

The average investment portfolio fees at Keep It Simple Financial Planning? 

Portfolio fee: .10-.30%

Management fee: .65-.95%

Technology fee: .20%

They try to do it all on their own. 

Most people think that financial planners only offer advice on investments or insurance. 

-while this is true for the majority of people calling themselves ‘financial advisors’ 

-there SO much more to get your retirement plan RIGHT


-Social Security timing (easily a 6-figure decision)

-Medicare plan selection 

-Estate and Tax planning

-Pension decisions 

-Business planning

-Creating additional income streams

-Tax reducing distribution strategies for your retirement accounts

-Roth conversions for tax-free investments later

-Business/encore career planning