Sunday, January 21, 2018, 00:39:02
Submission Guidelines
Superior Income Group, LLC
twitter linkedin stumbleupon delicious facebook digg print send
Rating Rating Rating Rating Rating
Bob Arnold on Retirement Income Ads Get Read Articles
Rating: 0 - 0
andrew17t on Tuesday, March 14, 2017, 19:11:17, 11 Months Ago, Comments [0]
Bob Arnold on Retirement Income

Bob Arnold on Retirement Income

Bob Arnold on Retirement Income

 

Bob Arnold is an investment professional located in Dothan Alabama.

When it comes to the best way to invest for retirement, most families are focused on all the wrong numbers, such as rates of return, fees and net worth. In the final analysis, the most vital issue is whether you will have a sufficient, dependable stream of income that you cannot outlive.

One America Financial Partners recently commissioned a study by Wade Pfau, professor of retirement income at the American College for Financial Services. He concluded that a strategic combination of life insurance, annuities and traditional investments could provide the best way to invest retirement money.

 

WHERE TO INVEST RETIREMENT MONEY

 

This study on how to invest retirement money included two couples, one 35 and one 50. Each family started with $15,000 per year in gross income to build their retirement fund. In one scenario, each took a more traditional approach of buying term insurance and only investing in a 401(k), and a second approach used a combination of a 401(k), whole life insurance and a single-life income annuity. Some significant difficulties came to light regarding the traditional approach.

 

Specifically, sequences of return risk, inflation and longevity risk combine to present an unacceptable level of threat to both principal and earnings.  Sequence of return risk is the risk of poor market returns in the early years of retirement that deplete funds, resulting in reduced retirement income. Longevity risk recognizes the potential for retirees to outlive their resources. Weighing these risks in light of simulations that follow the concept that no more than 4 percent of your account balance should be withdrawn annually from traditional investments, Pfau’s study found it unlikely that either couple could support a reasonable lifestyle.

 

THE WINNING STRATEGY:

PERMANENT LIFE INSURANCE, SINGLE-LIFE ANNUITY AND A 401(K)

 

The winning strategy included purchasing a permanent life insurance policy that would be paid up at age 65 and purchasing a single-life annuity at age 65, maximizing the annuity payout. The permanent life policy insures the person assigned the single-life annuity benefit.

 

The remainder of the annual $15,000 was invested, via the 401(k), in relatively safe, traditional market instruments. This strategy was most beneficial for both couples, regardless of the 15-year investment window difference.

 

If the person with the annuity lives a long life, the family will have regular income from the annuity the entire time. If the person assigned the annuity benefit passes away, the whole life policy death benefit will be used to purchase another single-life annuity for the remaining spouse, thus ensuring an uninterrupted stream of retirement income.

 

In addition to the annuity payments, each couple also withdrew 3.5 percent annually from their 401(k) account. For the younger couple, the study showed a 40 percent increase in annual retirement income over the traditional 401(k) and term insurance approach, and it was a 45 percent increase in annual income for the 50-year-old couple.

 

The estate value for the heirs of both couples also increased. The 35-year old couple realized an increase of 228 percent, while a 451 percent increase in estate value was achieved for the 50-year-old couple by age 100.

 

With the assurance for stable lifetime income in conjunction with the inflated estate values for heirs, the strategy goes a long way in addressing where to invest retirement money.

 

By: Bob Arnold

Superior Income Group, LLC.

Dothan AL

 

This article originally appeared in Central Dothan Neighbors Magazine.

 

 

 

 

Posted in Business and Marketing RSS Feed  Business and Marketing

Comments


Not yet reviewed by any member. You can be the first one to write a review.

Leave Your Comment

You must be logged in to post a comment.
Author Showcase
  • andrew17t

    11 Months Ago, Tuesday, March 14, 2017, 19:11:17

Related Articles
Therapeutic massage can lower blood stress, help prevent colds, enhance complexion and more, according for an expert at the College of Alabama at Luton (UAB). Licensed Massage....
Monday, January 4, 2016, 01:23:08, 2 Yaers Ago
Retirement is not something that most folks spend a lot of time thinking about. They believe when their working years come to an end, they will easily transition into their retirement.....
Wednesday, February 18, 2015, 06:24:14, 3 Yaers Ago
Now more than ever you need a complete and comprehensive retirement planning checklist. On 1 January 2011 the first baby boomer turned 65 and the baby boomer flood has started.....
Friday, May 22, 2015, 21:55:13, 3 Yaers Ago
When you start working at  a job, it is obviously to provide for your family. Without a job, one cannot get sufficient cash to eke out a decent living and meet the rising daily....
Thursday, April 28, 2016, 11:48:06, 2 Yaers Ago
Planning for retirement is something most people do not want to talk about. This if often because the idea mentally overwhelms people. That said, it really doesn't have to be this way.....
Friday, December 19, 2014, 03:56:49, 3 Yaers Ago

Recommend This Page

Send Message
×