Robert Wicks, Chartered Life Underwriter, Chartered Financial Consultant, has been helping clients through Financial Visions of NC for nearly 40 years. Taking time to listen to the needs, wants and desires of his clients, Bob has professionally built long-lasting dynamic plans that give his clients flexibility and peace of mind now and into the futures of their personalized, doubt-free retirement. Safety of retirement assets, a reasonable expectation of growth, no-loss protection, and a guaranteed 'lifetime' income are available. And always ... the goal is guarantees, not guesses!

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Thursday, August 04, 2016
Making The Shift From Saving To Spending In Retirement
Retirement has been referred to as the stage of “decumulation,” or when you start drawing on lifetime savings for income. It’s a notable shift after many years of building up a nest egg for future needs and goals. For many retirees, it can also be a period of uncertainty or stress. After so many years of preparation, what spending patterns are suitable for the golden years?

Financial behavior at this stage varies. Some of us refrain from spending when we can while others draw on retirement income more steadily. For many retirees, the fear of compromising retirement income security is one motivation for reduced spending levels. In a 2015 study, Hearts & Wallets, a financial research firm, found about 33.3% of Americans aged 65 and older drew no retirement income from their nest egg over the last five years.

Let’s look at some factors to consider when determining your “spending strategy” for your retirement lifetime.

Avoiding Spending Mistakes or a Downgraded Retirement Lifestyle

When approaching the question of retirement spending, it helps to look at it from the two extremes: excessive spending and thriftiness to the point of a reduced standard-of-living.

According to the Employee Benefit Research Institute, nearly 40% of retirees report their retirement expenses are higher than what they expected. Of course, retirement expectations vary from person to person.

There are some areas of retirement expenses which are easier to budget for than others: monthly housing costs, utility costs, and living costs, to name a few. On the other hand, some costs are more difficult to forecast: health costs, personal care costs, and miscellaneous expenses such as travel costs for family events, helping grandchildren with post-secondary education expenses, luxury vacation costs, and others.

For spending tied to aging, life events, or unforeseen situations, you can prepare by either having enough liquid assets laid aside or taking steps for cost control. Or it can be a combination of both. Of course, this should be considered in the context of the “spending extremes.”

Which camp do you fall into? Consider the following:

Conservative Spending Camp

• If you’re a conservative spender in retirement ��" or you anticipate you will be ��" it’s a matter of evaluating the severity of the retirement risks which affect your spending habits.
• Are you worried about the costs of healthcare or long-term care as you age? This is understandable, as the Employee Benefit Research Institute reports health costs skyrocket past age 74.
• Other factors which can affect spending decisions are inflation risk, market risk, and longevity risk. This is certainly understandable. Research shows the average retirement lifetime can last for 20 years or longer. As we have noted in other posts, inflation has risen 0.1-4.1% in the past 15 years or so, and if you’re relying upon stock market earnings for income, a falling market can be detrimental.
• However, if your fear of these risks is crimping spending to the point of a largely bare-bones lifestyle, it may be time to reconsider your approach to risk management.

“Go Big or Go Home” Camp

• Say you fall into the other camp: enjoying life to the fullest. The greatest risk is outliving your retirement savings, or burning through the nest egg to the point of income shortfalls.
• Of course what defines “aggressive” spending will vary, depending on an individual or couple’s assets, needs, goals, and circumstances.
• Say a thorough, individualized financial analysis shows spending levels or future spending expectations may produce an income gap. It’s worthwhile to consider better spending habits for long-term financial security.
• If you’re enjoying your retirement years but still spending less than your income, remember this. As you age, reducing tax liability, being ready for costly health expenses, and leaving a legacy to loved ones (if it’s part of your goals) take center stage.

Overall, decisions about retirement spending should be in the framework of a long-term outlook. What amount of income do you need for the lifestyle you desire, and what measures do you need to take to meet that income goal?

Personalized Spending Strategies

Cash-flow is an important part of retirement income security. Say you fall on the conservative end of spending and you’re worried about the retirement risks we discussed above or something else. Consider ways you can mitigate these risks.

If later-term health costs or outliving retirement monies is a concern, annuities can help with their guarantees of permanent income. Likewise, if what a falling market can do to your retirement assets scares you, annuities are great as a safe money vehicle. They are protected by robust, contractual obligations upheld by the insurance company.

What about if you fall on the opposite spectrum? Consider segmenting your income sources for different needs. Many retirees and pre-retirees allocate money from annuities, Social Security and, if they have it, defined-benefit pensions to fixed-income needs. Then they can draw on other income sources for other retirement expenses.

Then perhaps investigate measures of cost control. Finding ways to cut or eliminate costs will lead to greater independence in the long run. Ultimately, the way we approach our retirement money is up to us.


• Should you have any questions, feedback, or requests for future content that may be helpful to your planning needs, please call Bob Wicks, CLU, ChFC, at #919-332-9265, or email to him at ''.

Posted at 02:51 pm by finvisions777
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Wednesday, July 27, 2016
5 Ways To Botch Your Lifetime Income Plan
Financial security in retirement is a concern for many Americans. According to LIMRA, seven out of 10 retirees and pre-retirees name “having enough money to last their lifetime” as a top priority. LIMRA also reports 67% of retirees and pre-retirees say “remaining financially independent” is another retirement objective.

With these expectations, the importance of ensuring sufficient income for retirement can’t be overstated. But even with careful retirement planning, there are a number of pitfalls which could put income security at risk. Here’s a look at some challenges which may disrupt your financial security if they’re neglected.

Common Hazards for Retirement Income

Early withdrawals from retirement accounts. According to IRS rules, withdrawals from a retirement account before age 59.5 are subject to penalty. On top of income tax on your withdrawn funds, you have to pay a 10% penalty fee. From that standpoint, early withdrawals erode the amount of retirement income you would otherwise have later on.

Once you turn 59.5 years old, withdrawals from your IRA or 401(k) plan are penalty-free. However, there are some exceptions in which the 10% penalty doesn’t apply. A few exceptions are disability, an IRS levy, and other exceptional circumstances. In some cases, people turn to early withdrawals due to unforeseen events or emergencies. One way to be ready for such a situation is to maintain some liquidity in your personal finances.

Not having a suitable plan for distributions. Another important “retirement milestone” is age 70.5. When you reach this benchmark, required minimum distributions kick in. If you don’t start taking RMDs by this date, the IRS can impose a 50% excise tax on the amount you’re supposed to take out " which can be a substantial sum. Note that distribution rules differ for IRAs from 401(k) plans, particularly in the timing of when distributions must start.

Aside from providing the benefit of guaranteed, permanent income, annuities can help offset the rigors of preparing for this stage. But it’s important to choose the right annuity strategy. If an immediate annuity is purchased within an IRA, care should be taken to ensure payments will start no later than when the buyer turns age 70.5. The benefit is an immediate annuity within an IRA is calculated in the same manner as required minimum distributions are, based upon actuarial variables such as longevity.
In the case of deferred annuities, a number of options are available, including qualified longevity annuity contracts, which are designed to meet IRS mandates. Note, though, that this type of annuity contracts is subject to different rules than traditional deferred annuities are.

Under-planning for inflation. From 1999 to 2015, inflation ranged from 0.1% to 4.1%. In recent years, inflation has been low, but this doesn’t mean it won’t eat into the buying power of your retirement savings. Under-planning for inflation can be detrimental to your retirement later on. It might mean a shortfall in income over the long term.

Consider, for instance, the effects of cumulative inflation on health costs. From 1984 to 2013, just the cost of prescription drugs increased 338%. And retirees also face a unique challenge in healthcare inflation. According to the Employee Benefit Research Institute, a couple aged 65 desiring a 90% chance of having enough money for retirement lifetime health costs should have $392,000 saved up. EBRI research also shows that from age 65 to 74, average out-of-pocket health costs consume about 11% of aggregate household spending, but once you move past age 74, health costs skyrocket. The Centers for Medicare and Medicaid report that health costs will increase almost 6% per year until 2024 " a pace that is twice the rate of overall inflation at present".

Underestimating longevity. Life expectancies are on the rise, which gives us a longer time horizon to plan for. Research data shows retirement today can last for 20 years or longer. According to the National Center for Health Statistics, a 65-year-old man has an average life expectancy of another 17.9 years. A 65-year-old woman could anticipate an average life expectancy of another 20.5 years. This increased time horizon means more years to plan to have sufficient income for, along with accounting for other variables: market volatility, cumulative inflation, and more.

Concluding Thoughts

The point is it’s important to have a financial plan that balances all of these factors. A retirement strategy should include measures for how you’ll meet monthly living costs as well as spending on retirement goals and more specialized expenses as you age ��" house repairs, healthcare, and other factors. It’s also important to take heed of the retirement milestones we discussed prior and to minimize tax liability.

If you’d like to supplement income from Social Security or another vehicle, many seniors and retirees have found income security in annuities. They offer the benefit of giving income for up to as long as you live, bound by contractual guarantees backed by the issuing insurance company.


Should you have any questions, feedback, or requests for future content that may be helpful to your planning needs, please call Bob Wicks, CLU, Chartered Financial Consultant, at #919-332-9265; or, contact me at ''.

Posted at 02:59 pm by finvisions777
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Friday, July 22, 2016
5 Ways To Compromise Your Retirement
Through careful deliberation, many Americans have figured out their retirement planning requirements. But a comfortable retirement needs more than just creation of a financial strategy. It also means sticking to the plan you have developed.

Of course, there are some events beyond our control, events which can disrupt a retirement plan. Stock market downturns, costly unforeseen situations, and medical emergencies are a handful of such occurrences. There are some ways to mitigate the effects of these situations, but there are other mistakes which can prove detrimental to retirement security.

Here’s a look at some pitfalls which can put a retirement plan on the line – and which we recommend you take measures to avoid.

Retirement Plan Catastrophes to Avoid

Putting off saving. You may have outlined your financial goals in retirement and what you’ll need to achieve them. Nonetheless, people delay saving for a variety of reasons. It could be to pay for existing obligations, due to uncertainty over retirement accounts, due to money already being tight, or simply because of forgetfulness. However, because accumulating retirement savings is a long-term goal, it should be a top priority. Delays can otherwise prove far too costly.

Evaluate what sources of income you’ll be relying on in retirement. Do they have the sums of monies you need for your goals? If not, develop a plan of what you need to invest and save to attain those numbers, advisably with the guidance of a qualified financial professional. That way you can have greater financial security in your golden years.

Not getting help from a financial professional. According to research data, retirement often lasts for 20 years or longer. That is a long stretch to plan for. When you retire, monthly income and asset protection take on more importance. If your financial plan doesn’t prioritize these objectives, it may be in your best interest to work with a wealth planner specializing in retirement strategies.

The outcomes may be painful otherwise: a shortfall in income over time or unnecessary losses due to inadequate diversification. A wealth planner can help you evaluate existing income and asset preservation strategies, see if there are any gaps, and determine some options for customized solutions. You may also want to consult with a professional qualified in tax planning to solidify your plan’s tax-efficiency and minimize your tax liability.

Poor timing on Social Security, Medicare, account withdrawals, and other decisions. There are many retirement milestones: filing for Social Security, signing up for Medicare, and age deadlines for early withdrawal penalties and required minimum distributions, to name a few. In these matters and other decisions, timing is paramount. Claiming your Social Security benefit at the wrong time can mean missing out on tens of thousands of dollars, and a late sign-up for Medicare leads to costly lifetime surcharges.

Taking action at the right time for these deadlines is vital. In addition, if you withdraw money before you’re age 59.5, on top of paying income tax on your withdrawn sum, there is a 10% penalty. Likewise, when you reach age 70.5, required minimum distributions, or required minimum withdrawal amounts per year, kick in. You will want to carefully time when you take monies from your retirement vehicles so you avoid the effects of these deadlines.

Using retirement monies for impulse buys or things you don’t need. After many years of saving, it can be tempting to spend money on stuff you have put off buying. But some time down the road, that decision likely won’t seem as attractive. When you take money from your retirement accounts, you’re foregoing money in more than one way:

• Your retirement savings are less the sum you withdrew
• That is money that can no longer grow at a compound rate and make more money
• You have to pay taxes on your withdrawn sum, along with a penalty from the IRS if taken early

If you keep your money in your retirement account, it will continue to work for you. It’s definitely in your interest to leave your retirement savings alone and let them grow so you have more “retirement reserves” later on.

Asset allocation: not separating your “pay money” from your “play money.” During the working years, many Americans work with an advisor. You get guidance and look for investments which are likely to rise in value over time. However, in retirement, protecting your assets from market losses is important. In our professional opinion, the focus of a financial strategy should shift from net-worth to income and asset preservation.

Of course, it may be in retirees’ interest to have a suitable proportion of assets in the stock market. It helps to combat inflation. And of course many of us would like to try our hand at getting nice returns on certain stocks we favor. Nevertheless, putting too much of your nest egg into riskier vehicles can be disastrous, as recovery could take time you don’t have. Be sure your portfolio has a balance of risk and security which is suitable to your age, circumstances, and goals.


• Should you have any questions, feedback, or requests for future content that may be helpful to your planning needs, leave a comment below or call Bob Wicks, CLU, ChFC at #919-332-9265 or email to ''.  See us on Facebook at 'Financial Visions of NC'.

Posted at 06:52 am by finvisions777
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Thursday, July 07, 2016
What You Need To Know About Longevity

More than half of pre-retirees and retirees estimate their life expectancy to be well below actuarial projections, according to the Society of Actuaries.

Of the more than 900 pre-retirees surveyed in SOA’s biennial Risks and Processes of Retirement Survey, 55 percent underestimate how long they will live relative to recently updated mortality tables. One in five pre-retirees, which the study defines as being age 45 and over, say they expect to die 10 or more years before actuarial averages.

And 17 percent of retirees assume they will live 10 or more years below the actuarial average. SOA’s mortality tables show the average 65 year-old male will live to be 86.6, and the average 65-year old female will live to be 86.4.

Paying for long-term care, inflation, and the cost of health care were the top concerns for both pre-retirees and retirees, according to the study.                  

Behind the scenes of the new longevity estimates

Plan sponsors and professional organizations voiced concerns about the Society of Actuaries' release of its 2014 longevity tables--which had a...

Almost two-thirds of pre-retirees express concern that they will outlive savings in retirement, compared to 43 percent of retirees.

To avoid that risk, roughly 70 percent of pre-retirees said they expect to work in retirement, and 46 percent said they plan to postpone retirement.

That indicates a “disconnect between what people think they will do in retirement to manage risks, compared to what approaches retirees actually use,” said Cindy Levering, a member of the SOA committee that lead the research effort.

The reality, said Levering in a statement, is that only 30 percent of retirees are employed in some form, and only 12 percent attempted to postpone retirement.

Two-thirds of pre-retirees expect to have assets from an employer-sponsored defined contribution plan, and 48 percent said they will have assets from a traditional defined benefit plan. Only 14 percent of pre-retirees expect income from annuities.

For retirees over age 70, 44 percent report having a defined contribution plan or IRA from which they must take a required minimum distribution. Over half said they spend the RMDs, 47 percent said they save or invest it, and 23 percent said they use it to pay taxes.

Nearly one-quarter of pre-retirees and retirees said they have no plan for managing assets in retirement. One-third of retirees said their current level of savings is less than they expected they would have before they left the workforce.

About 30 percent of pre-retirees report having at least $30,000 in debt aside from mortgages, and another one-third are carrying between $10,000 and $30,000, the report found.

Posted at 11:45 am by finvisions777
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Thursday, June 23, 2016
Consumer Interest Grows In Income Streams
According to various sources, the consumer “craving” for guaranteed income options is on the rise. One area in which it is growing is workplace retirement plans.

Prudential Retirement reports that 78% of employer plan participants who say they’re familiar with guaranteed lifetime income options believe it’s “very important” to include them in workplace savings plans. Furthermore, 77% of plan participants indicated they would choose a guaranteed lifetime income option, if available.

These discoveries match prior findings. In past research, LIMRA has found 80% of U.S. workers would like a guaranteed income option in their workplace savings plan. General consumer interest in guaranteed income is also strong. LIMRA research shows 70% of retirees and pre-retirees say having enough money to last their lifetime is a top priority.

The Prudential study yielded many other insights:

• 54% say they believe offering guaranteed income options in employer plans would yield better-than-average outcomes in retirement.
• 80% will use their workplace savings plans as their primary lifetime income sources over other sources, including Social Security.
• 45% worry they won’t be able to meet retirement goals with current plans.

Despite these trends, most employers don’t offer annuity options in their plan offerings. Around 35,000 defined-contribution plans offer guaranteed lifetime income options ��" about 4% of the plan option landscape, at present.

What Does This Mean for Consumers?

Today, retirement preparation is largely an individual affair. In the past, we have discussed how workers benefited from employer-sponsored lifetime income-generating defined-benefit pensions. Since those days, workplace plan options have shifted to defined-contribution plan offerings. This can be seen in the decline in the number of defined-benefit plans over time.

According to the U.S. Department of Labor, since their height in 1983 to 2013, the number of defined-benefit plans declined 74.5%. Since 1983, defined-contribution plans have increased 48.9%. This increase in defined-contribution plans is also observable from the mid-1970s until the present.

With the rigors of retirement preparation now up to us, so is making certain we’ll have enough income in retirement. Many Americans can expect to spend 20 years or more in retirement. According to data from the CDC, a 65-year-old couple today has a 73% chance of one of them living until age 90. This longevity brings more years to plan for in retirement, including being sure you have sufficient income for all those years.

How can Income Needs be Met?

Depending on someone’s needs and circumstances, an annuity can provide financial security with a guaranteed income stream. It’s designed to help consumers achieve long-term financial goals, whether they want a guaranteed income anywhere from 10 years to the rest of their lifetime.

To determine if an annuity may be a good fit for your needs, it’s advisable to work with a knowledgeable professional. Use our “Find an Advisor” feature to locate an independent wealth planner and to evaluate different income strategy possibilities for you in retirement. Should you have any questions or need immediate help, please don’t hesitate to call Bob Wicks, Chartered Financial Consultant, at Financial Visions #919-332-9265, or, send to me at '' -- mention this June 23rd blog in your message.

Posted at 04:22 pm by finvisions777
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Thursday, June 16, 2016
Are You Generating Enough Retirement Income?
Do you have a dependable level of income for retirement? According to a new study, many seniors aren’t generating the retirement income they need. reports seniors in 47 states and the District of Columbia aren’t replacing enough of the income they earned in their working years.

The study found that at best, seniors are living off 60% of the income they had in their pre-retirement years. Financial experts believe retirees need at least 70% of their pre-retirement income. reports the national average to be 60.27%.

Why Does It Matter?

Of course there is more than one way to build a nest egg, including savings. That’s certainly good news, given the study findings. According to, much of the income shortfall can be attributed to a lack of savings among seniors.

Notably, if seniors have a shortfall in retirement income, there are other strategies which experts recommend:

• Working longer
• Delaying Social Security claiming until full retirement age or later
• Getting rid of debt
• Cutting back on spending levels
• Moving to an area with lower cost-of-living

However, not all of these “delay” or “reduction” strategies will be options for everyone. It does underscore the importance of making proper retirement decisions. For income planning purposes, a critical juncture lies in the 10 years before people retire and 10 years into their retirement. Retirement decisions made in this period can have a critical impact on the rest of someone’s retirement lifetime.

Financial Security with Guaranteed Income

Another strategy to consider is use of annuities. They can be used to generate a guaranteed income stream for as long as someone lives. Annuities are increasingly being used to supplement income from Social Security, pensions, and other sources.

What about people with healthy life savings? Annuities could be used to cover certain monthly expenses such as living costs. This could free up other sources of income and offer seniors greater financial flexibility.

Avoid the Alternatives

Without a set plan, a few undesirable outcomes could arise. Retirement money could be spent too quickly, seniors could outlive their retirement assets, or there may be unnecessary cutbacks in retirees’ standard of living. When used properly, annuities allow retirees and pre-retirees to avoid these possibilities.

There are many different types of annuities, and each comes with different features and benefits. Suitability depends on a number of variables, including personal circumstances, needs, and objectives. If you are interested in seeing an annuity may be a good addition to your retirement income strategy,  please contact Bob Wicks, CLU, ChFC, at #919-332-9265 or ''.

Posted at 06:17 am by finvisions777
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Wednesday, June 08, 2016
Three Retirement Pitfalls To Avoid

You’ve worked hard for many years. Upon retirement, most people would like to live on their own terms. Maintaining a comfortable lifestyle requires you to take the proper steps to secure it. That includes avoiding common errors which could put your retirement finances at jeopardy.

With precautions in order, retirees will be more prepared to enjoy a secure – and hopefully financially confident – future. Having said that, let’s cover a few pitfalls which could do a number on your financial security.

Common Retirement Pitfalls to Avoid

Not ensuring you have enough retirement income. One of the biggest mistakes someone can make. When people retire, income from full-time employment goes away. It becomes a matter of replacing it with new income sources – namely retirement savings, investments, Social Security, or other vehicles.

If you don’t have a plan for retirement income, the alternatives can be grim. You and your partner may have to work longer, or you may need to find new ways to save as much as you can. It could even mean having to reduce your standard of living to fit your new situation. The bottom line is a shortfall in retirement income can greatly change your quality of life. It’s better not to leave it to chance.

Ignoring rapidly-rising healthcare costs. In recent posts, we’ve talked about how costs for healthcare are increasing. According to the Employee Benefit Research Institute, since 1999 employer-based health insurance premiums have gone up nearly 300%. HealthView Services projects that someone who retired in 2016 will face annual healthcare inflation of 5.1% for the next 20 years – or where healthcare costs increase 5.1% per year.

In real-world terms, someone retiring in 2016 may have to pay $33,000 more in healthcare costs than someone who retired in 2015 – due to inflation! Despite the growing expenses, many studies show retirees and pre-retirees neglect healthcare inflation in their planning. Healthcare costs will be one of the biggest areas of expenses for most retirees. Don’t forget to account for it!

Forgetting longevity risk. As everyone knows, people are living longer than ever before. With ongoing innovations in technology, lifespans may continue to lengthen. With these longer lifespans, there are more years to account for in retirement planning. It may seem appealing to use your life expectancy as an age-based metric for financial planning purposes, but this actually could be a mistake.

According to the Social Security Administration, about one out of four 65-year-olds today will live past age 90. Moreover, about one out of 10 65-year-olds will live past age 95. In reality, it’s difficult to say for how long we might live. A better approach may be planning beyond personalized life expectancy metrics to help ensure you have enough money in retirement. On the whole, no matter what method you use, we believe the importance of planning for many years in retirement can’t be overstated.

Need Help?

Retirement planning can be a complicated process. According to research from LIMRA, seniors and baby boomers who work with an advisor report higher confidence in their retirement readiness. Should you need help from a qualified professional in navigating these retirement complexities and preparing for the future, please contact Bob Wicks, a Chartered Financial Consultant at Financial Visions in Raleigh, NC, at #919-332-9265 or ''.

Posted at 03:45 pm by finvisions777
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Tuesday, June 07, 2016
"CHOICES ... and Time"!!!


The fact of the matter is that you're the only one who can decide what to do with your earning power and, by extension, with your life. The two are inextricably linked. Decisions on what you want to do with your earning power come from answering questions such as:

  • Where do I want to live? Do I want to own my own home? Where? What kind of home?
  • What kind of lifestyle do I want to have? Vacations? Entertainment and leisure activities? Automobile choices?
  • Do I want to pay the bill for my kids to attend college? Public or private?
  • Do I want to start my own business some day?
  • Do I want to reach an age by which I can afford to stop working if I want?
  • Do I want to live strictly for today strictly for tomorrow or enjoy today while still providing for tomorrow?

If you think of life as a journey, answers to questions such as these become your destinations on the journey of life.

Remember people don't plan to fail they fail to plan. Taking control of your finances and your financial future can help you reach your desired destinations in life!

Posted at 02:45 pm by finvisions777
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Wednesday, May 18, 2016
What Is Your Risk Tolerance???
Annuities offer some strong advantages with their contractual guarantees, but they’re only one part of the financial picture. Overall, a portfolio could have many assets: stocks, bonds, mutual funds, annuities, CDs, or even other financial instruments.

This brings up the question of portfolio allocation. Is there a paradigm which you should follow? Ultimately, we would say it varies among individuals. Your portfolio should be allocated to reflect your current situation, your needs, your goals, your risk tolerance, and your risk capacity. Of course there are some well-known general guidelines, like the Rule of 100 and portfolio diversification.

As you get closer to the life stage of distribution, or living off your retirement savings, risk tolerance and risk capacity become even more important. But just what are these risk-related metrics?

What’s Risk Tolerance?

“Risk tolerance” is one of those terms which people hear often in financial circles. It refers to someone’s ability to psychologically cope with periodic declines in the value of their investments. In other words, your risk tolerance is your appetite for market risk – or the pressure point at which portfolio losses become psychologically unbearable.

What about Risk Capacity?

Risk tolerance is quite different from your risk capacity. Risk capacity refers to when portfolio losses are so steep you need to change your plan. It’s a point at which you have to readjust course.

It’s not unusual for pre-retirees or retirees to have high risk tolerances. In the past two decades, they’ve gone through two major bear markets and their portfolios have largely, if not entirely recovered from the windfall. However, while risk tolerances may be high for people aged 50 and up, their risk capacities have fallen. This has strong implications for the future.

Why Does This Matter?

When you reach retirement, life evolves. Your financial strategy shifts from preservation – when you’re saving up money and “preserving” it for retirement – to distribution – when you’re living off the savings you’ve put aside. From an income planning standpoint, the time before you retire is a critical juncture.

Let’s put this in the perspective of a declining risk capacity:

• As you get closer to retirement, your time horizon for preparation shortens
• Too many equity allocations (for example, a big stake in the stock market) leave a portfolio more exposed to future bear markets
• For investors without income sources like pensions, financial portfolios are likely to be a primary vehicle for spending needs
• A bear market may take years to recover from, which can be a timespan people don’t have in retirement
• If you’re relying upon your portfolio for spending, portfolio losses could prompt larger, premature withdrawals – which has strong tax implications
• In time, it can lead to your portfolio being depleted prematurely, or force you to reduce your spending levels, which impacts retirement lifestyle

The takeaway is when too much of your portfolio is allocated into equities like stocks, it could have adverse effects on your retirement financial life.

As the financial markets go through extreme swings, you need some measure of financial certainty. That’s why it’s advisable to have “safe money” vehicles such as annuities as part of your portfolio.

Why Annuities?

The right annuity will offer protection from market risk as well as guaranteed lifetime income, a hedge against inflation, and tax-deferred money growth potential. It’s a vehicle which lets you preserve retirement assets while having growth opportunities. Like any financial product, however, annuities aren’t for everyone. Nor are all annuities equal in the value they deliver.

Consider the following, for instance. Over many years in the industry, our team has seen many negative effects coming from variable annuities to the point we don’t recommend them. Variable annuities tend to come with many “gotcha” features (hidden fees, for one).

Posted at 02:23 pm by finvisions777
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Wednesday, May 11, 2016
Changing Priorities In Retirement
Having strong financial knowledge puts you in a position to make well-informed decisions about your future. It also brings peace of mind – people establish control over their money and prepare themselves for a financially secure retirement.

Unfortunately, over the last several years retirement confidence has been negative. It’s in no small part due to events like the 2008 recession or the recent stock market correction. The Employee Benefit Research Institute reports in 2015, just 37% of workers said they’re “very confident” about having enough retirement money.

Changing Priorities in Retirement

So how should you boost your retirement security? When people reach retirement, things change. Their financial strategy shifts from wealth preservation to distribution. Their risk tolerance also changes. Should retirement income security be a concern, an annuity can help with its income guarantees.

Data from the Secure Retirement Institute Review, courtesy of LIMRA, indicates people who own an annuity have more confidence in their ability to maintain a comfortable retirement lifestyle.

If you’re looking for ways to boost your own retirement confidence, adopting a “Safe Money Strategy” and adding an annuity to your portfolio may be of interest. Let’s cover some advantages of this approach.

Why Purchase an Annuity?

Annuities enable someone to preserve retirement assets while enjoying a steady, guaranteed income stream. This source of income comes from an annuity’s contractual guarantees. The source of income can last from a set period to the rest of your life. Annuities are the only vehicle which offers the benefit of guaranteed lifetime income.

Other advantages of an annuity include:

• Safer vehicle than stocks, mutual funds, and other volatile assets
• Backed by the insurer’s financial strength and claims-paying ability
• Insurance carrier could be reinsured by others carriers for more protection
• Contractual guarantees for returns and withdrawals
• Tax-deferred fund growth (until withdrawals)
• Options for market index-linked growth potential
• More flexibility with income rider additions

Keep in mind annuities differ in terms of their contract design, features, and benefits. Like with any financial product, it’s important to learn about them, their advantages and downsides, and how they may fit into your portfolio. Take time to develop a thorough understanding of any annuities you’re considering before committing to a purchase.

Need Assistance?

Considering different annuity products may be more beneficial with the help of a qualified professional. They can help you understand how it fits into your overall retirement plan. If you need help developing a comprehensive retirement plan, an independent wealth planner with experience in retirement planning could be a tremendous asset.

Posted at 03:43 pm by finvisions777
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