Tackling The Pre-Retiree Fear: Outliving Your Money
One of the most palpable fears that many pre-retirees and retirees grapple with is outliving their savings. This sentiment isn’t new. Way back in 1937, Napoleon Hill, in his seminal book “Think and Grow Rich,” identified the fear of poverty as a chief concern among humans. Fast-forward to the recent findings by the American Institute of CPAs (AICPA), and it becomes apparent that despite the evolution in financial landscapes, some fears remain timeless.
The results were illuminating when AICPA surveyed financial planners during a market upswing in 2018. Concerns like spiraling healthcare costs, erratic market behavior, and unforeseen difficulties topped the list of factors that could erode their client’s savings sooner than anticipated.
So, is there a solution on the horizon? Yes, and it’s been around for a while – annuities. Specifically, income annuity and fixed index annuity with an income rider. These financial instruments promise a guaranteed lifetime income. In simpler terms, they’re designed to ensure you don’t outlive your money.
However, there’s a significant catch: comprehension. Despite their potential, annuities remain misunderstood. A 2019 survey by the American College captured this gap starkly. Among Americans aged 50-75, each with substantial assets, a whopping 86% floundered on a basic annuity quiz. The primary stumbling block? Differentiating between guaranteed monthly income and a systematic withdrawal. This underscores a pressing need: financial literacy is crucial, especially in the twilight years.
But why this gaping knowledge chasm? One reason for this is the scarcity of quality information. As Steven Parrish from the American College opines, while many economists sing praises for annuities as the cornerstone of retirement security, few financial advisors broach this with their clients. This skewed representation means that most consumers often have half-baked or misinformed perceptions.
Moreover, the same American College survey unearthed a surprising insight. Nearly 80% of participants valued liquidity over iron-clad guarantees. This group also harbored moderate confidence in their investment management skills, believing their nest egg would comfortably see them through their twilight years. On average, this group projected their life expectancy to be 86. But herein lies the million-dollar question: What if one outlives this estimate? Without a guaranteed source of income, the financial future becomes a high-stakes game of dice.
Managing finances in retirement isn’t just about being savvy with investments. It’s about foresight, planning, and having a backup for the rainy day. For those approaching this phase, ponder over the allure of contractual guarantees. Dive deep into the annuity world. Seek counsel from a reputed, licensed professional. Their guidance may be instrumental in striking a balance between the funds you need immediately and those you might need later.
To conclude, retirement is supposed to be your golden period. It’s a time to reap the rewards of decades of hard work. However, it may quickly become a financial stress period without adequate planning and knowledge.
Don’t let retirement fears overshadow your golden years. Equip yourself with the right knowledge and tools today. Start your journey to financial peace of mind by exploring annuities. Talk to a trusted, experienced professional and ensure a worry-free tomorrow. Act now!
- Prevailing Concern: Many pre-retirees and retirees fear outliving their savings.
- Historical Context: This fear has been noted as far back as Napoleon Hill’s “Think and Grow Rich” in 1937.
- Modern Data: AICPA’s recent findings highlight concerns like rising healthcare costs and market unpredictability.
- Solution on the Horizon: Annuities, specifically income annuities and fixed index annuities with an income rider, offer guaranteed lifetime income.
- Knowledge Gap: Many Americans lack a clear understanding of annuities.
- Liquidity vs. Security: 80% of surveyed individuals prefer liquidity, potentially risking the outliving of their funds.
- The Importance of Professional Guidance: Consulting with a licensed expert may help navigate the complex world of retirement planning.
Brad Pistole, a native Missourian, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Syndicated Columnists is the sole provider of this material, both written and conceptual, for this column. All rights reserved.
Trinity Insurance & Financial Services Inc. 5511 N. Farmer Branch Rd., Suite 101, Ozark, MO 65721. 417-581-9222 Brad Pistole (retirevillage.com)
