In December of 2019 Kirk Douglas (famous actor) turned 103.

Everyone celebrated as they should, but it got me thinking about the faulty financial plans millions of Americans have and how many of them will run out of money in retirement years before they actually pass away.

The fact of the matter is we are living longer now than ever and financial planners, for the most part, have not adjusted their planning techniques to deal with this critical issue.

Traditional Financial Planning

For decades financial planners have given the same financial planning advice.

Essentially financial planners recommend that clients use an “appropriate” mix of stocks, bonds, and mutual funds while you are growing wealth and then when you get into retirement you need to transition your money into something more conservative (so as to avoid stock market crashes).

Then the financial planner gets his/her spreadsheets out and shows you why, using certain assumptions, you will NOT run out of money based on your expected income and expenses until your assumed age of death.

It looks good on paper, but let’s look at all the different variables which are all opportunities for the financial planner to be WRONG!

1) Rate of return on the growth of money leading up to retirement.
2) Rate of return on money once in retirement.
3) Amount of contributions that can be made to a retirement plan while still working.
4) Amount of expenses annually before retirement.
5) Amount of expenses in retirement.
6) Assumed age of death.

Hmm. If any one of these assumptions is wrong, it can cause you to run out of money potentially years early in retirement.

Due to space issues, I’m not going to pick apart 1-6 above. Just know that the chances of any assumptions made today being too on the market 5, 10, 20+ years from now are remote (which is one reason you should sit down at least once a year with your advisor to see if your plan needs to be tweaked).

Protecting your retirement income stream—one tool that every person who lives past their assumed age of death wishes they had was a financial product that guarantees an income for life that pays no matter how long you live.

If you are thinking to yourself that these products don’t exist, you’d be wrong.

They do exist and I’m a huge fan of them.

The financial services industry is a funny place. Large firms like Wells FargoA.G. Edwards, and many others for years have either forbid their advisors from selling certain guaranteed income for life products or certainly have not encouraged it.

What if…

What if there was a financial product that had the following terms?

1) 100% principal protection (your money will never go backward due to negative stock market returns).

2) Positive gains are locked in every year.

3) Can come with a 5-7% guaranteed rate of return* on an accumulation value (not walk away value) used to calculate/provide for you a guaranteed lifetime income* you can never outlive?

Is that a product that a financial planner should offer?

Can you think of a good reason a financial planner shouldn’t be talking about a product that will make sure clients don’t run out of money if they live to age 90, 95, or 100+ like Kirk Douglas? You’re not alone.

I can’t think of a good reason, and I make sure I talk about the pros and cons of products that have guaranteed income for life riders with all clients who they may make sense for.

I want to make sure that no matter how long my clients live that they will have an income source that will never run out (one besides Social Security).

Want to learn more?

If you want to learn more about guaranteed income for life products and whether one may be a good fit in your retirement plan, please email me  or  give me a call at (704) 464-2426 and I’d be happy to get you more information.

*Any guarantees mentioned are backed by the financial strength and claims-paying ability of the issuing insurance company and may be subject to caps, restrictions, fees, and surrender charges as described in the annuity contract.