Why Are You Investing For Your Retirement?


Typical answers to this question are wide and varied, they include; retirement security, returns, growth, freedom, and fun. Although each of these answers make sense the one that matters most is income! The biggest thing that people need to understand it makes no difference how much money you have in retirement it is how much money you have after your taxes have been paid.

Everyone needs income that they can count on. Unique consistent cash flow that shows up in your account every month such you never have to worry about how you will pay your bills or if your money is going to run out. It is great to have a large investment portfolio but what happens if the stock market suffers a dramatic decline like in 2008? In few days your assets could be slashed by up to 50%! If this happened today would you be able to live comfortably on happy retirement savings for the rest of your life?

Dr. Jeffrey Brown a retired expert and advisor to the White House said it best in this recent Forbes article: “Income is the outcome that matters most for retirement security”. Being asset rich and cash poor often leads to stress and even bankruptcy. This can be avoided by focusing on reliable and consistent income.

As I research articles from newspapers and magazines on retirement income all the financial advisors seem to say the same thing. Max out your 401(k) contribution. Save more money. Reduce your lifestyle. Strategize your Social Security claiming strategies. While this is all good consider the following. If you max out your 401(k) contribution and you are in a higher tax bracket than when you started you are going to be paying higher taxes on that money. Do you think taxes are to be higher or lower in the future? Personally, I think that they will be higher because not only the national debt which is at over $18 trillion but with Social Security and Medicare taking the majority of taxes to fund these programs because the baby boomers are retiring at a rate of 10,000 people per day, there’s nothing else the government can do.

Another thing that I keep reading about is they want you to put your money in taxable and tax-deferred accounts. Nothing ever seems to be said about putting your money in a tax-free vehicle. What is a tax-free vehicle, permanent life insurance. Your money in this type of vehicle grows tax-deferred, you get your money out tax-free, by IRS code 7702 and 70 E. It also does not affect taxation of Social Security, which can be huge in retirement. Also, there are many other benefits a permanent life insurance. Another thing that people are uneducated about is the value of doing a reverse mortgage. Many people in retirement age our house rich but cash poor. You can get money out of reverse mortgage in three different way, a lump sum, a monthly payment, or a line of credit. All of this money is tax-free!

People in retirement do not have the luxury of waiting on the ups and downs of the stock market. How would you like to have a financial vehicle that can have market like returns but never lose money due to a market downturn. I know of only two financial vehicles that can guarantee you this by contract and they are fixed indexed annuities and permanent life insurance. Also, a financial vehicle that can guarantee income for life is a fixed indexed annuity.

If you are 59 ½ or older and approach retirement you should start thinking about how you will avoid the greatest risk of living too long, running out of money!

This article is submitted for educational purposes

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