Much like a superhero swoops in to save the girl from the villain and bring her back to safety, I would like to believe I am swooping in to save you from committing financial errors and bringing you a more financially secure retirement, because retirement can be threatening if you don’t approach it the right way.
From this sentence that you are reading right now to the very last sentence in this article and everything in between, you are going to get answers to the two most important questions retirees and pre-retirees have:
Is my money protected and how do I know my money is protected?
- If you follow the advice I am about to give you, yes, it is protected.
- How do you know? There are multiple safety nets backing up the value of your money. Keep reading.
When your friends and family ask you what they can do to help ensure a financially secure retirement, you’ll be equipped with the knowledge to help them and help save them from making a financially unsound move, much like I would like to do for you today.
So, let’s get right to it, shall we?
In order for you to understand how to be financially secure in retirement, you should first understand the ins and outs and differences between investments and savings. Let me start by giving you our JD Mellberg definition of investments and savings:
- Investments have the ability to rise in value, but they also have the ability to lose. Why is this? Because they are not backed by a dollar-for-dollar legally required reserves system.
- Savings are not designed for growth accumulation, but most savings vehicles do steadily rise in value. The most important concept to understand about savings vehicles is the fact that, unlike investments, they are backed up with a legally required reserve systems to protect the value of your money.
It is important to know these differences. Many retirees who confuse investments with savings become concerned once they learn that their “secure” investment isn’t so safe after all; they usually learn this once their investment loses a great deal of value.
This is the moment when they wish someone would swoop in and bring them back to safety, and I am intending to do that for you now before you get into a situation where you have to urgently hope for it.
Alright, let’s break it down and rank the priorities. We’re first going to start with investments:
- Growth/return of money: The first thing many people are concerned with when comes to investments is, “how can I get growth on my money?” and “what type of return will I make from this investment?” They want to know how much money they can potentially make.
- Safety/security: The second thing people want to know with investments is how secure their money is. They often ask, “Is there a return on my money?” or “do I get my money back?”
- Income on money/net cash flow: The third question people ask is, “what income does this investment produce?” Many people want to know the dividends and the net cash flow of the investment.
The people who want to live their retirement with confidence and financial security shift their focus from capital accumulation (that isn’t ever guaranteed) to capital preservation and income growth.
That being said, let’s shift our attention to the way these retirees think and the order of priorities for savings vehicles:
- Security: These retirees want to know, first and foremost, how secure the money is that they depend to live on in retirement. The number one item of importance to these retirees is ensuring they get their money back no matter what.
Well, the retirees with this mindset can get that peace of mind because savings vehicles, such as annuities, have a legally required reserves system in place. What does this mean? By state law, all insurance companies are required to keep dollar-for-dollar in reserves; this applies to immediate annuities, fixed annuities, fixed indexed annuities, hybrid annuities, etc.
This allows protection of the value of client accounts. Investments, such as stocks, do not have a reserve system, hence one of the reasons some stocks can lose all their value. You will learn much more about this when you watch my video.
- Income: The second priority for people concerned with savings vehicles is what income they will earn. They often ask, “how can I maximize my income?” What’s important here is that you receive a consistent and reliable income stream for as long as you live.
- Return/Growth: For the third priority, many people ask, “what is the return on my savings?” and “what is the growth I will get?”
If anything were to go wrong with your savings vehicle, the legally required reserves system would be your “superhero” in that situation. You will always be rescued with assets protected no matter what.
Now that you know the significant differences and key concepts of investments and savings, it is time for you to take the next step. Understanding why one approach may be more suitable for you than the other is the beginning. You are now ready to turn the page and see what’s next.
You can fill out a survey here on our site and one of my licensed insurance agents, and hand-picked, top income planning specialist will get in touch with you. Or, if you want immediate attention, you can call us at (619)291-1233.
It doesn’t matter which approach you take because the ultimate result is the same. You will be in touch with one of my top income planning specialists, who will then assess your particular financial scenario.
My income planning specialists have been highly trained to treat each client and their situation with the uniqueness they possess. We will provide you with a personalized Income-For-Life Illustration, and you will also get a package of my educational eBooks, so you can learn even more! The education never stops. This is just the beginning, so get in touch with us right away!