Personal Income Planning was previously neither prevalent nor important. In the past, most Retirement planners gave little thought to developing an income plan at all due to the combination of Company Pensions and Social Security, which were often enough. However, times have certainly changed as employers passed on the risk of creating a pool of money large enough to provide income for a lifetime to its retirees. This shift from Defined Benefit to Defined Contribution went largely unnoticed. 401K, 401A, and 403B became familiar, and by then, it was too late. This shift led to underfunded portfolios and retirements marked by stress, work and dwindling options. In the 1980s, 80% or more of employers offered a pension while today, about 10% do so. Now, several decades later, most investors finally understand; they are now fully responsible for any income shortfall. Social Security was never designed to be a retirement plan – It was to be a mere safety net and at most, a supplement to the Pension and Private funds necessary to produce a stress-free retirement.
What can be done? By using the same tables that corporations and insurance companies use, one can create a Private Personal Pension-like payment plan which provides a lifetime income stream. After the completion of an insured Pension-like strategy, reasonable growth potential for additional investment dollars can be structured.
At Fletcher Financial Group, we are not relying on investment dollars in the market while hoping to achieve enough excess growth to pull some mysterious returns off the top while the principal magically continues to grow. We believe those outdated calculations are irresponsible when planning for retirement income today. Retirees must have a plan, employing the very same mortality and life expectancy tables used by Corporate Pensions. NO guessing - a concrete plan, one that will not run out of money before running out of life!
If you are still working with an "accumulation" advisor, Good Luck! Setting up a systematic monthly withdrawal from a risk-based account can be disastrous during retirement and beyond! Many charts fall apart when calculating retirement benefits beginning just before the market crash in 2002 and 2008 ... and 1994, to mention only a few!
THE ANSWER is an inflation-protected and insured, laddered Income plan using reliable accounts – featuring lifetime income and pre-determined growth on the Income Benefit portion of the plan until lifetime income is triggered ... anything less is taking unnecessary risk, in our opinion!
Scheduled LifeTime Income eliminates worry and questions about one’s ability to retire and STAY retired. Since income is no longer tied to the stock market’s performance, our clients can relax and concentrate on travel, grandchildren, or other passions. They never have to consider whether they “got in” at a historical high or low and how their future income is affected. Heirs could still benefit from indexing to market performance, but the private income base grows at a steady rate as specified in the contract and when the income is triggered, it is set for life ... very similar to the way a corporate defined benefit payment is structured. This income is FOR LIFE (of course, based on the claims paying ability of the insurance companies making the claims). Additionally, by factoring in future inflation, the income adjusts, so our client’s lifestyle does not. An Inflation Laddered Income Plan (I.L.I.P.) has been the answer for many of our clients. By positioning the least amount of money necessary into these income-producing accounts, your income and principal can go the distance for retirement and beyond!
An Inflation Laddered Income Plan (I.L.I.P) provides scheduled income starting on a specific date, either now or in the future. By positioning these assets into an I.L.I.P., one can establish a pension-like income stream during retirement. The I.L.I.P. uses a laddered account approach to provide this style of income. Each step up the ladder increases income to keep up with inflation. What monies are not positioned within the income plan can then be invested more aggressively. Money should be set aside for vacations and emergencies. Our 3-STEP REVIEW takes these ideas into account, offering “sleep insurance”. Call and request our 3-STEP REVIEW.