Retiremeng Guys: Have a Written Retirement Income Plan? (Retirement Questions, Part 1)Written by Nolan Baker Mark Clair | | firstname.lastname@example.org
What Tools Can You Use to Grow Your Money?
If you think about your money and the idea of retirement, where can you put it to help you reach your goal? We ask folks this question as they come to us to form a retirement plan, and we get a variety of answers. Here are a lot of the answers we get in no particular order: Stocks, Mutual Funds, Bonds, Annuities, Gold, Real Estate, CD’s, Savings Accounts, Money Market Accounts, Oil and Gas, Currency, etc. If you think about each one of these, there can be varying results when you invest in each one.
What Results Can You Get From Each Different Kind of Investment?
Let’s talk about some of these we have listed for a moment, and the possible results. With Stocks you have the potential for the stock to increase in value. As a stockholder, you have a piece of ownership in the company and if the company does well your share values may increase. How much? Who knows? It depends on a lot of factors. If you are fortunate enough to invest at the right time, you may experience huge increases in values over a short period of time. If you’re timing is bad, you could experience huge losses.
If you don’t like risk, you may have put much of your money in the bank. With the backing of the federal government on your deposits, you may feel safe from the possibility of losing your money. What are bank accounts currently paying? 5-6%, right? Maybe back in the good old days, but you are lucky to get anything in today’s interest rate environment. It seems like the bank acts like they are doing you are favor by holding your money for you and not really paying you much in return. All the while charging account fees, etc. Another feature of a bank account is that in many cases it is liquid. You can drive down to your local bank branch and draw it out.
Bonds, are viewed by many as safer than stocks. Are they, really? When interest rates go up, the values of bonds go down. With interest rates very low, ask yourself, “where the rates will go in the future?” and, “what it will do to the value of bonds?” One result we can get from a bond is potential tax benefits. If we buy municipal bonds we can get some tax advantages that other investments do not offer.
How about annuities? Our view is that there are good ones and bad ones, and they may have a place somewhere in an overall plan. What annuities offer, is tax deferral and the opportunity for income for life if you exercise certain options that various annuity accounts may have. This means that if you start taking a fixed income stream for life from an annuity, even if your money would have run out, the insurance company still has to continue paying you the income for the rest of your life.
What Matters the Most to You In Life?
So far we have talked about Tools to use with our money, and the Results we may experience by using those tools. Let’s stop for a moment and think about what really matters. When we ask this question, we get answers like Health, Family, Kids, Grandkids, Faith, Pets, etc. If the tools you use make you a lot of money but you lose your health, will the amount in your bank account help you? Think about Steve Jobs of Apple. No amount of money could save him. Sadly, many of us wait until we lose our heath to turn to faith. When The Retirement Guys help formulate a retirement plan (we call it The Retirement Game Plan) we think it is vitally important to come up with a comprehensive plan that ultimately helps you enjoy and focus on what is important. Think about what that is for you.
There Is No Retirement Without Income
Part of that planning process is an income plan. Do you have a written income plan? If not, why not? Without income, there is no future (retirement). It’s all about income. This is an important question to ask yourself, and if the answer is no, you better get with someone that can sort it out quick. I (Mark) sure don’t want to be stressed out worrying about if I will outlive my money in retirement, and I bet you don’t, either.
For more information about The Retirement Guys, tune in every Saturday at 1 PM on 1370 WSPD or visit www.retirementguysradio.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. 419-842-0550